I posted this also at the skincity tutorial section of Beyondunreal first, but thought anyone wanting to make skins should know this here too.

I'll keep this tutorial short and simple. As it requires you to name your textures and material instances specific names it could get a little confusing at first. One simple way to prevent that is make sure you name all your texture layers the names I am showing you in the screenshots, so when you import and/or overwrite you don't have to rename everything from scratch.
If one texture is named different, you may not see your material instance on your model in the game.
UT3 likes material instances used on characters (I'll call them MICs from now on) because the parent material the MIC is based on has many instructions to make the game work properly with your model. If you create a new MIC and not choose a parent material the game may crash or your character may render funny in the game. Sometimes as a bright yellow blur that looks like a lightbulb on steroids.
Theres a few MICs you can use as a parent for your own custom MIC that you apply to your model. They are:


Each base MIC contains different graphical functions. Some have cubemaps, some have slots for sidelighting thats more brighter than the others. Experiment and try each one as the parent for your MICs. Use whatever you think looks best for your model because not every MIC looks the same.

To clarify before you get too excited about these functions, that not all the features are viewable in the actual game environment. I am not sure if this is a limitation put onto non-cinematic character models or not, but it's trial and error to get some things to work. Specifically cubemaps.
The MICs are not like regular materials with nodes and such, your stuck with some specific slots for textures. Your not given as much flexability this way and could be a little frustrating for anyone wanting to put a model in the game with lots of graphical enhancements. Just know that even Epic's ingame models suffer from this too, so it's not just you.

Now that you have pretty much your basic MIC for your model set up by right clicking the Generic window where your character was imported and choosing New MaterialInstanceConstant. Then choose the parent as one of the base MIC, like the irong_base. You need to fill in the slots for char_normal,char_diffuse, and char_specular under TextureParameterValues. Additional slots can be toggled on by opening StaticSwitchParameterValues. Items like fresnal and reflections. If you check the boxes next to these functions it will open slots for them below. Reflections are tricky to turn on becuase you have to have an emissive texture(preferably a greyscale image) entered and then you choose a cubemap for the reflex texture. Not really useful if your character is using emissive already for lights. So for this tut I will skip discussing reflections until I get more data.
Fresnal adds a little extra side lighting to your material, enhancing the bump a little. I just add my diffuse texture into the fresnal slot too, seems to do the trick enough for me.

But more importantly before you do any of this, and even if you already have started, you need to name your textures some key words.

For this tutorial, lets say we only have one model or character we want to put into the game. We would name our textures like this:
For the main body color diffuse texture:
*charactername*_MBody01_D01_V01_SK1 . For example: "XanM3_MBody01_D01_V01_SK1".
For the main body normal map texture:
For the main body specular map texture:
For the main body emissive texture:
For the main body specular power texture[determines how bright or sharp your specular is]:

Do the same for your head textures but name them the same as above but change the _MBody01_ to _Mhead01_ instead.
Now your MICs must be named:
For your Teamcolor MICs theres some changes you must make to the MICs your using. To make it easy, right click and duplicate your main body and head MIC and name them:

Now open up your Red or Blue teamskin MIC for the body.

For the blue you need to scroll down to the bottom and look for VectorParameterValues. Press the blue arrow to drop the menus down. If your character is using an emissive for lights, check the box next to "Char_Emissive_Color" and then adjust the RGB values that best suits your needs. Look at your material in the preview window to see how the change looks. This will enable lights to change to teamcolor lights when needed.
Below that is another box you need to check, as its important.
"Char_Teamcolor" you can also tweak the rgb values to match the right blue hue for your character. This will enable a blue glow around your character from a distance.
At this point if your also have a custom blue or red color diffuse for your model replace the the diffuse texture in the slot under "TextureParameterValues". This is so your character uses a custom texture too , along with the colored glow. Do the same for your red head and body MICs too , just adjust the RGB values that best suits your needs so you get a good red hue on your red MIC and replace the diffuse with your red version too.