lol every skins made with paint will look like crap..btw if you wanna do some beautiful skins use the MSZ skin kit and get GIMP or Paint.net they are freeware and easy to use!
First of all set your ingame skin downloads to 1024(pic 1) and then if you wanna use non public skin that you have downloaded just go to lfs/data/skin_y(pic2) and pick a skin that you want but it will be in dds so you can use Paint.Net to convert them to jpg!