in your vmt file, there's a line that starts with "basetexture". the value that you add to this line will tell the engine where to look for the vtf file, relative to your [mod]/materials folder.

so "basetexture" "fishy/godlikemapper/bestevertexture" (in the vmt file) would tell the engine to look in my [mod]/materials/fishy/godlikemapper/ folder, for bestevertexture.vtf

it doesn't matter where about you put the vmt, but having it in beside the vtf keeps things tidy.

so;

• the red bit doesn't go in the vmt
• the orange bit is the folder (relative to the red bit)
• the green is the vtf. (image file)
• the blue is just to make your eyes go funny

btw, if you don't already have folders with those names, you'll need to create them.

(or you could use silly names of your own )