I'm still having problems decompressing the LZS compressed files using the algorhythm Fice has give.  I also do have a small 'update' to the documentation for it, LZOFFSET is 18 for the following reason 3 is your minimum length 18 is your maximum length.  The makers of the format likely surmized that if you can't go back at LEAST your maximum length and read all that data you will end up trying to read from unwritten data on the output (a bad thing) so they put that in to alleviate potention errors.
If I find the background files I'll be happy (smirk) either they are MIM BSX or DAT my guess is DAT or MIM.  Anyhow here is what I am using to decompress LZS (pardon the lack of commments).
#define  LZLEN    3
#define  LZOFFSET 18
AnsiString  TMain::LZSDec(AnsiString FName)
{
   fstream     File;
   fstream     Out;
   AnsiString  Return;
   char        Ctrl;
   short int   CtrlBits;
   unsigned short Ref;
   int         Offset, Len, DestLen, FileEnd;
   int         Pos, NewP, Result;
   char        OutB[64];
   File.open(FName.c_str(), fstream::in | fstream::binary);
   Return = "temp";
   Out.open(Return.c_str(), fstream::out | fstream::in | fstream::binary);
   if (File.is_open())
   {
      File.seekg(0, SEEK_END);
      FileEnd = File.tellg();
      File.seekg(0, SEEK_SET);
      if (Out.is_open())
      {
         DestLen = 0;
         CtrlBits = 0;
         Ctrl = 0xFF;
         while ((File.tellg() < FileEnd) && !File.eof())
         {
            if (CtrlBits == 0)
            {  // read more control bits here
               File.read(&Ctrl, 1);
               CtrlBits = 8;
            }
            if ((Ctrl & 0x01) == 0)
            {
               File.read((char *)&Ref, 2);
               Offset = (Ref & 0x00FF) << 4;
               Offset+= (Ref & 0x0F000) >> 12;
               Len = ((Ref & 0xF) >> 8) + LZLEN;
               Pos = Out.tellg();
               // the new position is
               // the current position - 18 - Offset
               NewP = Pos - LZOFFSET - Offset;
               // and the result with 0xFFF
               NewP &= 0x0FFF;
               if (NewP == 0)
                  break;
               // if the Offset position is <=
               // the current Output position
               if (NewP <= Pos)
               {  int I;
                  Offset = Len / NewP;
                  // the resulting position is within the file
                  Out.seekg(Pos - NewP, SEEK_SET);
                  // the Length is greater than the offset
                  if (Offset > 0)
                  {  // read the New Position bytes
                     Out.read(OutB, NewP);
                     // now write the data (Length / Offset) times
                     for (I = 0; I < Offset; I++)
                     {  // write out data here :)
                        Out.write(OutB, NewP);
                     }
                  }
                  else
                  {  // read len bytes
                     Out.read(OutB, Len);
                        // move back to our position
                     Out.seekg(Pos, SEEK_SET);
                     // write len bytes
                     Out.write(OutB, Len);
                  }
               }
               else
               {  // it's beyond the begining of the file
                  // so we just write out 0's
                  memset(OutB, 0, Len);
                  Out.write(OutB, Len);
               }
               DestLen += Len;
            }
            else
            {  // copy the byte
               File.read(OutB, 1);
               Out.write(OutB, 1);
               DestLen ++;
            }
            Ctrl >>=1;
            CtrlBits--;
         }
         Out.close();
      }
      File.close();
   }
   return Return;
}