What versions of blender and the addon are you using?

its pretty easy actually, just convert vtf to png and use this png texture on model, that method works if you want to use this texture in blender, now if you want to use the texture on fully ready model which is imported into a hammer/game then you have to make new folder in materials and call it models

My example
D:\SteamLibrary\steamapps\common\GarrysMod\garrysmod\materials\models\[material folder name (it can be any name you want)]

now the name of the texture in folder should be same as the name of the texture in blender otherwise prop will be without texture in game.

Hope that helps ya

You can also use SourceIO to import .vtf textures directly.