Here's the basic process so far, I have tried a few of them ingame and they work great, so this works so far.
Please note that the tiles are slightly bigger than you would expect them to be and do not fit neatly together, in fact they actually overlap slightly which provides a snug fit in game.
Step 1 Edit
Download a free square tile or texture, you want something that is fairly consistent so that the tiles come out seamless. You can also make your own texture with The Gimp.
Step 2 Edit
Save this template file. You will be using this as the tile mask.
Step 3 Edit
Paste the template onto the texture, you can do this in any image editor eg mspaint.
Step 4 Edit
Resize the image to 80 pixels by 36 pixels (the size of the template). Here are a few I've already done.
Step 5 Edit
Optional Step - Create Tile variations Once you have made your new seamless tile you can start to make variations of the tile. In this example we will make a tile that has a blood stain on it. I just cut the blood stain out of an old screen shot and then pasted it onto the new tile. You can use this method to make a tile that has bits of grass on it or some bones for example.
Step 6 Edit
The following are the two opposite transitions templates, for creating the transition from one tile type to another.
Here's an example of the transitions from dark sand to light sand.
Step 7 Edit
You can now cut the new tiles into separate 80x36 tiles and save them as a PNG file.
Step 8 Edit
Now it is possible to convert the tile into a FRM for use with FO1 or FO2, this can be done by using Frame Animator. Just add each PNG tile into frame animator and create a new FRM for each tile.