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So I mod the skin, no problem, but once it goes ingame, it's all shiny! Does anyone know why this is?

Yes, some models are shiny, the easiest way to get rid of that is by making an alpha layer on your skin (transparancy).

I tried that and it just merged the layers. No difference in the game.

It doesn't make any difference on its actual appearance in-play though.

I seem to remember some sort of tutorial on this, but can't find it.