\Freelancer\FLARDATA\Textures
should be the folder structure
inside you have the PBR texture folders e.g. NormalMaps
Creating normal maps would be the starting point, Metalness and Roughness maps later on if you need them. HeightMaps would be a special case that you wont need that often actually.
Create the DDS files and put them into the folders using the original texture names that you can find via UTF. If you work based on original tga textures don’t forget to flip the texture before storing them as dds.
Normalmaps need to be stored as ATI2 and all others as ATI1 dds. Overwrite textures can be dxt1-5.
You dont need to manually edit the material file (but you can). You can use the ingame dev menu to set roughness and metalness values. These values get stored inside the material config file.
I personally edit the material config manually once I know the settings. This way I can group textures which have similar settings and keep everything lightweight that way.