Ok, As I posted earlier, I'm surprised by how many people here don't do their damage points correctly. Damage points are the spots on the model where enemy weapons fire connects with your ship model when you get shot at. It's also where the damage appears on the model in SFC3. So it's kinda important for those phasers to hit the side of tyhe model facing the enemy... instead of hitting a part of the ship that the shooter can't even see! Also, the damage on your SFC3 models will appear a lot more frequently and in the right place if you take the extra 3 minutes to set them up correctly.
This tutorial assumes that you have some 3D software that you use to kitbash or make models with, that you can move the damage points around with (or create new ones). I prefer to use 3D Studio Max, but I realize this is out of most people's price range. Whatever the program you use, the process is the same. The ship model I chose to use is Thu11's new Sparrowhawk which I am in the process of converting to SFC3. (BTW Thu11, if you give me permissions, I'd like to include this ship and the new condor in the TNZ mod).
Damage points are organized by the area of the ship they are supposed to be located on, so the game knows where to put the damage on the ship. First the ship is broken down into 6 areas. Each area is assigned a letter from A to F. Each area can have up to 3 seperate points where damage might be located. What these areas really mean is what parts of the ship can be hit from which directions. A for example, is the areas of the ship that can be hit by frontal attacks. Note that this means some ships might have areas that can be hit from the front, that are not part of the front of the ship. When the ship takes a hit in combat, the game will first determine what direction the hit came from in relation to your ship by the letter system. If your ship was being shot at from the Starboard (that's Right for all you landlubbers) then the game will choose B or C as the areas that can be hit, and it will pick one of the 3 points in the chosen area that is closest to the angle of the attack.
Ok, take a look at the first graphic.
The big red circle shows you where all the damage areas are. A-F are arranged clockwise around the ship from the front, starting with "A". Within each letter area, there are three points, numbered 1-3. So the first point in section A is A1, which is the rightmost point in the A section. To the left of A1 is A2, then to the left of that is A3. As we keep going around the ship, the next point we should come to is B1, then B2, then B3 then C1 then C2 and so on all the way around the ship. But, there is a catch. If you want the damage to appear all over the ship and not just around the edges of your model, then you have to consider that some parts of the ship will never get hit (or damage textures) if you just plot the points around the outside of the ship. So, if you look at the Sparrowhawk in the example, you can see that I've pointed out various places on the ship where point A1 might be located. The nose, the front of the superstructure and the leading edge of the Port wing are all places within reasonable reach of a frontal attack. The Port nacelle might also be a reasonable frontal target, but that part of the ship will probably have a damage point from the E or F areas too, so to maximize the areas of your ship that can show damage, you should spread them out as much as possible. I'll further note here that placing a lot of damage points on the underside of a model is probably not wise, since you hardly ever see the underside anyway. Now look at the possible spots I've chosen for A2 and A3. If I were to place the three "A" points on the possible points I have indicated, the ship would seem more real because my phasers might hit the engines, or the bridge, or even the wing, all from the same direction.
Now look at the second graphic. This one shows us where we might place C1 or D1. See how the wings and engines make a lot more possibilities for damage locations? D1 can be placed in up to 4 different spots!
Now imagine what your models were like when you just randomly sprinkled those damage points around your model, compared to the dynamic and exciting damage locations you can have! Ok, so maybe it's not that exciting, but it only takes a couple minutes, and it's one of those little things that can really improve a model to those who will fly it.