Click on the icon where it is labelled Color and set the File texture to be the checker image as mentioned earlier.
To be able to see the texture on your 3D model, select Shading > Hardware Texturing.
Click on the place2dTexture1 tab and change the Repeat UV values to 100 or a value that shows enough squares to be able to see all the detail you need.
Close this setting window and then click on the Perp/UV button on the left hand side tool bar. Make sure you have selected the 3D model in the left window to be able to see the UV map in the right window. The UV map should look like a front view due to the planar mapping we did earlier. You should also be able to see the checker texture file in the background. Press the Dim Image button so you can see the UV lines more clearly against the background.
