http://www.moddb.com/tutorials/garrys-mod-10-personal-skin-making (http://www.moddb.com/tutorials/garrys-mod-10-personal-skin-making)
Instead of using converters try this, it's a photoshop plugin to open/create/save VTF files, very sexy
http://nemesis.thewavelength.net/index.php?c=154#p154 (http://nemesis.thewavelength.net/index.php?c=154#p154)
I used that tutorial :)
How do I make the vtf2tga program to work? Can't understand the readme
Edit: Nevermind I figured it out.
Texturing is the bane of mod making. It is the least fun thing.