DXT5? I think that's the problem. DXT5 is not an FS9 texture format.
FS9 recognizes and displays DXT1 and DXT3 formats. DXT1 has no alpha channel, so if you convert to that format you'll lose any transparency or reflectivity in the textures. DXT3 has an alpha channel, so it will retain any transparency or reflectivity.
However, be advised that DXT formats are very lossy, meaning that the quality of the image deteriorates every time the file is opened. If you look at them closely, DXT textures often look like crap. After long enough, they'll look like crap even if you don't look very closely.
If you want to retain the quality of the textures, and assuming your computer isn't some old, slow, steam-powered rig, save them in Extended 32-bit 888-8 format.
In case you don't already know, you can do this work with DXTbmp, freeware from Martin Wright Graphics. Be sure to take the required DLLs as well as the DXTbmp program.
You can save the files with or without mipmaps. Mips are lower resolution copies of the image, meant to be displayed when the plane is some distance away and fine detail can't be seen. Trouble is, FS9 often displays a lower resolution mip when the plane is still near enough that the lack of detail is very visible, and/or the plane's paint job looks very soft and fuzzy. Saving the file without mips means that the full resolution image will always be displayed. It means that your computer will work harder than necessary when the plane is seen from a long way off, but it will always look good up close.
