Is "tile1.tga" a normalmap? If not, there are a cuple of textures to convert it to one (the results will probably not be the best, but you can play around with the different ways when it basicly works). Even GS can make your texture a normalmap.
Just call this somewhere:
bmap_to_normals(tile1_normal_bmap,1);

If that still does not work, show us a screenshot of what it looks like.

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