1) Tga - this is the source file, likely located on the developers' computer. We don't need the link.
2) We create a link. Usually, the image is placed in the same folder as the xdb file, and the link is shortened to href="filename.dds".
3) Type - usually set to REGULAR; I don't know what it affects, but regular textures usually look better.
ConversionType - affects the transparency of the texture; since ours doesn't have any, we leave it as is, usually - CONVERT_TRANSPARENT.
AddrType - CLAMP
Format - in this case - TF_DXT1
Set the width and height.
IsDxt - true, because it's DXT1
InstantLoad - true, so it loads immediately.
The rest doesn't concern us, as it's used when exporting through the editor.