Click the standing man icon on the top right of your screen. This will bring up your player status screen. The reputation column is what you are interested in & it looks like this:
Scroll to the bottom. the Flashing faction there is the tag/IFF you project on the server to others. in order to change it, undock into space and press enter as if you are about to communicate with someone and type /droprep
this will lower your reputation tag from green to white and replace it with the next green colored faction above it. (for example, if I were to /droprep in the above picture, my tag would change, "zoner guard" would change to white and move further up the list, while "zoner" would move to the bottom in its place & begin to flash.
Repeat this process until the tag you desire moves to the bottom.
As mentioned, it does cost $$$. it's not much, but it adds up quickly so make sure you can cover the bill.
Also keep in mind that 9 squares represents a full reputation while the 10th square always remains empty. Make sure that the tag you desire is a full 9 squares before you begin the process, or else the game will skip over it to the next faction reputation that does.
I completely understand your confusion. It's a confusing thing at first, but with time and practice, understanding of how the /droprep system works will come to you one day soon like an epiphany and help you better understand other aspects of the game as well
::edit- heh! I'm SOOOO SLOWWWW!!...nevermind. Glad you got it sorted::