[ART] .DDS Files Not working?

[DnALANGE]

You could try this.
Open up a material already existing.
For example Entitie\Cloth\ClothPile..
Open it and you see all the dds\jpg\tga files it uses.
then open the diffuse file... Press on the ...
Then search for your picture (dds) and open it. (Have to be in YOUR custom story folder!)
That way you can see if it excually works.
that is how i Always make materials
Give it a try.
There you can add also If it would be a Decal\SolidFuse\Water etc..