The tfl website has now been updated.

http://www.tfl.gov.uk/tickets/faresa...ares/6769.aspx

"You will need to get an Oyster card and have your Railcard discount
concession loaded on it. This can be done at

Tube station ticket offices
London Overground station ticket offices
Some National Rail station ticket offices "

The text also mentions the Watford Junction cap rates which "Your Guide
to fares and Tickets 2 Janurary 2008" does not.

The tfl conditions of carriage have also been updated.

http://www.tfl.gov.uk/assets/downloa...age-08-01-02.p
df

7.7 National Rail Railcard discounts

For details of how to obtain a National Rail Railcard, see 5.9.

If you hold a Young Persons, Senior, Disabled Persons or HM Forces
Railcard and an Oyster card with the National Rail discount loaded on
it, your Oyster daily price cap will be 34% lower than the equivalent
adult-rate cap.

This discount is only available to the cardholder. If you are
travelling with other people who are entitled to a discount on any
printed tickets bought in association with your Railcard, the entire
group must purchase and use printed tickets. ==


--
Mike D