I have a default replacement skin package that I want to replace my skin textures with.
I downloaded SimPE version 0.77.69 and tried to replace one texture with my own. However, the program showed me an error, stating "unable to read the file/invalid CRES." My textures are in BMP format and are named like the default skin.
I also noticed that the Nvidia DDS Tools, which were mentioned back in 2006, are no longer available. Is this tool still necessary for what I'm trying to do?

What do I need to do to replace the skin textures?

How did you try to replace the textures? Are they the same size as the originals?

The DDS tools are still available on nVidia's site, but it seems to give some people trouble. I'm not sure the image format you want for best quality is bmp though? Someone more skilled in CAS will have to weigh in on that, but the basic way to replace dds images is still valid.

http://www.simfileshare.net/download/4482336/

Make sure to replace the texture, not the resource (I also find it odd if you're getting CRES issues with a file that doesn't normally have a CRES or mesh parts included in it).

Use DXT 3 or 5 (5 for see-through transparency, 3 is fine for most other things, Bodyshop seems to convert everything to DXT3). DDS can also be used.

PNG is fine. Don't use JPG. BMP can in some cases make very large files.

If you use DXT texturing or DDS files, don't do "update all sizes" (DXT does this automatically). This option is meant for a different type of import, and can cause texture issues with DXT.

If there is no transparency, use DXT1 to save half the space. DXT3 is for sharp cutouts of uncompressed 16 color transparency like a circle or text where a few extra shades is enough anti-aliasing. In Nvidia tools you can also save uncompressed RGB 8.8.8 color for select, small images that have contrasting colors that don't blend together well.

Is it okay to replace a texture if it is in PNG format? And do I need to download DDS tools for this?

DXT1 tends to give a worse result than DXT3 for the texture (usually ends up more grainy - better than just "import", but worse than DXT3). Would not recommend it for textures you want to keep the quality of. It compresses the files more, which likely causes the extra artefacts. It's not always visible right after importing the new texture, but when you save/commit, move away from the TXMT and come back, the texture has a tendency to change.

(DXT3/5 also causes some artefacts in the texture, but less so than DXT1. I don't recommend re-extracting and using textures from new recolors several times, because this will add on to the artefacts).

The main difference between DXT3/5 is the alpha channel - compression rate and artefacts seems to be roughly the same.

(and before anyone comes and says "no it isn't like this!", I just tested one of my own textures. Imported it as DXT3 and as DXT1, extracted the new textures, and compared them with the imported texture. DXT1 definitely had a lot more visible artefacts the DXT3 version didn't have, among them giant greyish 4x4 pixels, which were perfectly fine areas on the DXT3 version). Example below (might need to scale them up in an image viewing program, because it's on pixel level).

Yes, you need the DDS tools. Yes PNGs are usually fine.

I had to drop 2 rows to get a mod4 height. The images are identical. Look with a hex editor to see half the bytes unused. Don't select the "DXT1 1-bit Alpha" option. That will rob the pixels of a color level to give GIF-like transparency. I also tried the more recent Intel Texture Works plugin, which produced worse quality.

No idea what you mean by any of that - there are just plain DXT1, 3 and 5 in the DXT texture builder. You can select different options from the dropdown menu in the TXTR to change the format, but I've often found this can cause equal and in some cases worse pixellation (depending on setting).

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Maybe those weren't the best example, since the textures were 512x512 so already a bit small. It's visible ingame and quite visible if in a larger format, though.

Bigger, zoomed-in (via picture viewing) picture below. The colors bleed, and there's pixellation where there shouldn't be. I've seen worse examples, though (I just grabbed the first texture I found. This one could maybe have gotten a pass as DXT1 if it hadn't already been a small texture, plus it's an outfit so it needes DXT3 at least, to preserve the alpha. Some colors like red/black/white plus more detailed items tend to have worse color bleeding with DXT1).