Make sure you rename the folder so the game sees it as a new character (don't forget to rename the files inside as well to match the folder's name).
Simply open the 'CharacterMod' folder from the starting kit. If you only want to change the appearence of an already existing character, you don't have to go through the trouble of using complicated programs Now it's time to mess around with the contents. The game automagically takes all the character folders and considers them individual characters. MoveorDie \ Mods \ \ Lib \ Assets \ Characters \