Import pictures into a custom story?

[SilentStriker]

remember that you need a .dds file and then use the material editor to get a .mat file

I renamed one of the pictures from .png to .dds if that's what you meant, but I couldn't find it in the MaterialEditor.
Can you explain in a more... Noobish way? xD
This is the first time I try to use ModelEditor.

You can not rename files since you need to open it in photoshop or gimp and use their corresponding .dds plugin (or find a .png to .dds converter)

The for the material editor, open the material editor change the Type from decal to solid diffuse then check the Diffuse box in Texture Units and press the ... on File and choose your picture then save the .mat file somewhere inside the billboards folder and drag your .dds file to that folder as well