Inspired by leeor_net's flare effect here: http://opengameart.org/content/flare-effect

It's not obvious how to create these kind of effects in Blender, but once you know where to look it only takes a minute to set up.

What I did, in order:

- Change render type under "Sky, Premul, Key" to Key.

- Change format to PNG using RGBA

- Add a mesh with just one vertex (I made a plane and removed the extra 3 vertices)

- Add a material to this mesh.  Change the material type to halo

- Set the material color to pure white

- Halo materials have a special Shaders tab to set flare options.  I made the halo size bigger and enabled Rings, Lines, Star.

- When you render using these settings (in 2.49) the alpha in the Render window might look messed up.  Save the png and check with an external app like GIMP.

By further experimenting with the Halo shaders tab, you can create a decent variety of flares.