I used online pictures/screencaps and resized those to the dimensions I liked. Used carbon paper to transfer outlines and letters to the cloth. Then used markers and paint pens to color the image. Used standard ink for the letters.
It's been a while, but I think I aged the cloth before painting and then lightly again after, so I could get the aging on the colors just right and still have thoroughly aged cloth.
Cut and torn the cloth to fray the edges.
After that, I went on to fight an evil sect. But that's another story... ;-)