Hi,
Basically:
The Texture which should be distorted need to know THAT it should be distorted...
Therefore you set for the 1st MaterialStage (The Image) the UV0 to be "2D Mapping -> UV Distort":

- uvdistort.png (27.95 KiB) Viewed 3306 times
Then you add the Distortion Material Stage..
Please have a look into the Usermanual as well hover over the Material Node, press F1 to bring up the interactive example: "Interactive example for Advanced Texture Mapping".
Hope this helps a bit..
Best Reg
Arts
Dee
