I have a friend who runs a computerized embroidery operation from his house. He's done Polo shirts, jackets, and hats for me. He does very good work. I'm not sure what he would need to create the Penguin logo for us. Those machines use special formats. He can convert into those formats, but I'd have to contact him to find out what he would need from us. I'll ask him about it when I see him Sunday.
My grandparents run a embroidery/garmet embellishment business out in California. They have a special application that when you open an image file, you can draw/trace stitch patterns on top of it. He called the process "digitizing." I created my own /. polo that way. ;) I'm guessing the file format is proprietary to the embroidery machine and it's associated computer application, but probably just contains the coordinates for each stitch, changing to a different color thread, etc.
Jeremy