Texture updating is working 100%, well other than the error message appearing for a feature that isn't ingame yet (OOOOH SPOILERS!).
Do as the dude above said, check image size & various other things.
Also if the texture item is in an activated pack updating them with http://forum.toribash.com/tori_textures.php doesn't work. That page only works if the texture items are loose in your inventory. Packed textures can be changed by going in the pack, and editing the texture item itself.
<Erf> SkulFuk: gf just made a toilet sniffing joke at me
<Erf> i think
<Erf> i think i hate you