I had a similar problem. If you have a loose file in your root that is also included in the .vpp_pc file spit out by this great, great mod, it can cause a problem. Specifically, a custom skin mod bork'd my install, because there already was one in the .vpp_pc this mod spit out (so, user error, not JD's).
Extracting the .vpp_pc it gives you in to your root, and working from there (updating ALL .asm_pc's when done moving files) worked for me, BUT, it is not a method acknowledged or condoned by this mod's author, JediDave, so you'd be doing it at your own risk. I hereby relieve myself of all responsibility should this action be taken by you or anyone you've ever met.
I talked to IdolNinja about it in chat, and he (agreeing with me) found it odd that a "loose files" option is not given when generating the mod you want, but that may be because JediDave knows these specific files better, and may have found a problem with doing that.
I'm only just now getting in to actually putting all these tattoo graphics I made in to the game, so I wouldn't know (at least not yet).