Set it to bicubic in the texture part for all channels that that decal appears on in the material editor for that texture. Make sure your not resizing the texture like 1 to 1 works best. Big textures work better than small ones and if it really is hard to get it to stop doing that then try turning off analaising on that texture or making a new bigger texture ( this is difficult because it may be UV mapped.) Oh and if it's a jpg picture of the decal that may be it right there as in it's over compressed. Bmp works best. Or any lossless image format. You'd have to try to fix it and it's very difficult. I found a pluggin for photoshop finally for the jpg squares. Photoshop 7 may have a similar pluggin built right in but image doctor for Alien Skin works really well on such over compressed images.