Some models supplied by valve in the workshop page are incorrect, however not all of them are. Since the last time I checked, Valve could have fixed Necrolyte's model in the workshop.

Did you first try to use the one supplied by Valve? I wouldn't decompile anything manually until you know for sure that it doesn't work.

Also: in what wa are the hands still in the incorrect positions? If you decompiled exactly as shown in the video, you should be getting the model that is in-game which means it's 100% correct.

Well, in the video, you download it off the valve website. You open it, and his hand is as if he were holding his scythe vertically. You say its the incorrect position, then open up the version you decompiled with StudioCompiler, and hes holding his scythe horizontally which is supposed to be the right position.

When I tried, despite using StudioCompiler to decompile, hes still holding no scythe in the vertical position.

Here's my advice:

Go ahead and use what Valve provided (for now). Model your items as you would normally, and rig everything normally. Then export your stuff and compile using the in-game compiler. If it works, then Valve must have updated/fixed necrolyte's model somehow. Otherwise I might have to look into it a little more deeply.

Ok thanks I'll attempt that.

Alright this might better illustrate what I'm referring to: http://i.imgur.com/qAfrstT.jpg

notice how the hand does not correspond to the position of the reaper scythe. Also, when I watched your tutorial you only imported necrolyte_model.dmx.smd, and yet he had all of his parts. When I import that file, i only get the base model, and I have to import each piece manually.

Are you saying it might still work?

Yes, it might still work.