Converting Flags

Hey guys i am trying to modify flags but this is the best result i got
http://i47.tinypic.com/20741e9.png

I saved in DDS DX5 General MIP MAPS, used dds2iwi and CRCFixer.
I tryed many other settings but this is the best one.
Plz tell me how to convert it or if you dont know it just a little advance to how to convert it.

Converting always changes bits that causes lines or other problems in your texture, i don't think this is fixable except there's a fully bugless converter working