I'm really no expert on this, and i got a running tga -> dds converter only yesterday. And my first test did work (except for problems caused by my own stupidity
). So the only advice i can give is the obvious things:
-Have you tried to convert another file to localize the problem (VPKTool or your skin)?
- did you specify "DXT 5" and "generate MipMaps" when creating the .dds?
- did you have the corresponding tth files in the same directory?
If it still doesn't work, i'd try and get another copy of vpktool, perhaps yours was corrupted in the download. I couldn't find it on PlanetVampire right now, so just download any of the unofficial patches or i can send you a copy via email.
Sorry this is all i can think of right now.