fnav77

ATC would give you an intercept heading to "intercept" the localiser, you don't intercept the localiser on your own. With that final turn, usually comes the ILS approach clearance. A good intercept is 30 degrees, so if the runway track is 360, then ATC would give you a heading of 330 or 030 (depending on where you are, of course).
When given clearance to intercept the localiser, you then arm the autopilot LOC mode....

I am not currently sitting at my FSX PC, but from memory, they are indeed .txt files you can edit. My experience is that you have to edit both the flow and the procedure, for example "before start flow" and "before start procedure", and they both need to be identical. If I am not mistaken, you can also edit the flow directly from the Interface....
I think you can find them in my documents somewhere, I would need to double check.
 
You need to have a good look around your computer to find all the different files, folders, etc....