VTFTool

If uv'e got steam installed you can download VTFTool to convert your tga to vtf/vmt's, since studiocompiler doesn't seem to work on the latest verison of steam.

Anyways just stick the exe here

C:\Program Files\Steam\steamapps\username\sourcesdk\bin and follow the steps below.

























Then click 'lets go' and select 'no' in the dialog box.

Just make sure all tga's are 1024x1024 / 32bit if your using an alpha and 24bit otherwise.

Also the specular map goes in the alpha channel of the normal map, so dont create a seperate texture for each.

http://www.wunderboy.org/sourceapps.php#vtftool