Custom materials/skins are disabled in SiN: Episodes for some non-explained reason. Apparantly you can use custom models, sounds, and other things, just not custom skins.
The only workaround to be able to use custom skins would be to create a SiN: Episodes mod in the SourceMods folder and put the skins there (Kind of like how this mod
does it. Sorry for the nude mod example).
If you do this, you'll also need to copy over all your config settings, stats, save games, and etc. too, assuming you still want to use them.