Reskinning problem, trying for the first time

Hi guys, i'm trying my hand at reskinning for the first time for Railworks with RW Tools (I want to see if i can make the skins I want before I purchase a license)
and while I can get the .DDS file I need to pull up in photoshop to make a new skin, I am having a heck of a time getting it to convert back into a texture file for the program.
Am I doing this the hard way? Please tell me there is an easier way to do this than the way I'm doing?
Here's an example of what I'm doing

Can anyone give me some pointers? I really want to be able to make my own skins (which I will definitely share)
and while I can get the .DDS file I need to pull up in photoshop to make a new skin, I am having a heck of a time getting it to convert back into a texture file for the program.
Am I doing this the hard way? Please tell me there is an easier way to do this than the way I'm doing?
Here's an example of what I'm doing

Can anyone give me some pointers? I really want to be able to make my own skins (which I will definitely share)