I don't have SFM installed on this computer, but as far as I know you just copy/paste the models and materials folders from that zipped file into the appropriate Source Filmmaker folder. Then it should show up.

I did this, and the model shows up in SFM. However it comes up as untextured with the black/purple pattern, even though I also copy-pasted the textures aswell...

I put the hat model files from the zip to:
Steam\SteamApps\common\SourceFilmmaker\game\tf\models\player\items\engineer

and the textures from the zip to:
Steam\SteamApps\common\SourceFilmmaker\game\tf\materials\models\player\items\engineer

Did I put something in the wrong place or am I missing something? I'm kinda lost here.

Hm.. I thought that might happen. The tf2 compiler probably has the cdmaterials path set up to be something other than where your current materials are located. Open up the .vmt file and check to see where the filepath is. Put your materials in that folder. It should be something like models/workshop/player/items/engineer/

Well, I couldn't get SFM to work, but I used the in-game preview instead and that works. Thanks