Custom Models in a story

[Your Computer]

2) go into the root "resources.cfg" and add a directory leading to your custom story folder. Then in the level editor, place any entity down, click the "Mesh '...' " button on the bottom right and find the entity through your custom story folder. (this is more time-consuming to do, but space-saving)

I would always recommend this method over any other, just make sure the folder is at the end of the list in the resources.cfg file.