Hmm, odd.
OK try this.

1> Rename your tga to something else for safekeeping.
2> Copy some other tga from somewhere in the Gamestudio folder,
say the Gstudio\templates\images folder.
2a> Save it to the same folder as your .C script lives in.
3> Change your code to match its name, and try it out.
4> If it works, rename the tga to the same as your old ("flat.tga"),
and change your code too. Try it out.

What happens?
Also, what program is creating your tga file? Shareware is sometime a bit funky.
Post the TGA if you can. I never could, Im forum-challenged.