Tip: the curtain was made using Hash Animator Master. This inexpensive software lets you control curves, vertices and surfaces in a way that is very similar to cloth. You could also create the curtain by creating a squiggly spline in 3D Studio Max and then extruding it down three times (figure). The second extrusion is scaled down to generate the curve. Another alternative still, you could probably do it using the new NURBS feature in 3D Studio Max.

The mapping coordinates should not be applied flat on to the front of the curtain, but rather in a tilted way. If applied flat to the front, it will cause the texture to stretch on certain areas.
Lighting: apply strong spot lights coming from below or the top, always in an angle, to cause the folds to cast shadows on one another. If the spotlight is applied straight on, it will not generate the nice dark shadows, thus reducing the 'cloth-like' effect.