Make sure to check <game path>/data/skins/Skins_README.txt if you haven't already.
And if you got the urge to load-in image saved in .dds format, you can try out ImageMagick of FFmpeg to do so, quick google will show you what you need to get them running. Than both programs require just this one command line for basic usage:
Just remember that the 2D plane of the skin file LFS needs, due to technical reasons with 3D graphics, does not have proper aspect ratio when imported to the game. Thus, for example even size circle in the editor will become bit squeezed / elipse. Maybe one day someone will make plugin for blender to edit the skin when it's already mapped on car for best preview.
what works for me is to grab a blender skin rendering kit, add a new UV layout and arrange it in a way that avoids stretching, then working in GIMP and previewing in the skin using that new layout in Blender
after I'm done, I just have to bake the project using the default UV layout and downscale to 2048p