Good Afternoon Dragonharh
It appears that you also have a 'explosives.texture.txt' file, in which case Trainz will see this as a texture and not a thumbnail. Unless you have a mesh, or your config.txt file, referencing 'explosives.texture', you can safely delete the 'explosives.texture.txt' file.
Please note, the setup you are showing in your screenshot will also cause an error, since your config.txt file is referencing the original 'jpg' file, whilst you also have a .texture.txt file referencing this same file. When you commit, the .texture.txt and the jpg will be converted to a '.texture' file, meaning there will be no jpg file remaining, and hence the config.txt will be referencing a non existent file.
Regards