what version r u using 7 or 8

in 7 for booleans u select ur 2 objects
first select ur bullet then ur tect go polygons booleans and difference
and it will cut it out

the other way: select ur bullet
go polygon uv's and automatic mapping
then tweak the uvs to to get a map so there is no streching
(window - uv texture editor)
F1 will help
then export this map and paint a bump (black and white) map in PS ect
create a new blinn in the hypershade (window -rendering editors- hypershade)
then under blinn click the checkered box next to bump map
chose from file and locate ur bump map