Afaik, that is really bad way to make normal map, it just looks wrong.
RickyBlender, It is a bit difficult to make ‘perfect’ normal map from such a image you have packed in that blend.
I used program called njob to make these bump and normal maps.
If you use 2.5 you can preview bump maps with glsl view in 3d viewport. Just add that braB as a image texture, at the influence panel,
enable bump mapping:
method - best quality
space - texture space
and then you can just adjust normal value to your liking.
To add a normal map in 2.5 add it also as a image texture.
At the image sampling panel, enable
Normal map and from the dropdown menu enable tangent.
At the influence panel, under geometry adjust Normal value from -1 to +1 to your liking.
Afaik, there is NO good way to make normal maps from images in blender, you have to use external application for that. And also, that picture is really small, normal map from it will not be nice because of that.