Wish I knew how to texture myself those Blockheads.
I'm working on a new version that makes it easier to make your Blockhead without having to make your own skin
But if there's a custom texture you use, you can easily use VTF Edit to import the PNG file, set the alpha and normal format to DXT5 and save it as a VTF file and put it in any materials folder inside the SFM's game folder, then use the element viewer to change the texture to your face/torso decal (which the description will explain exactly how to do that in case you don't know how)