Alright. So I've made tiny baby footstep progress.
I made Sonic's head work by reducing the number of textures down to 2. Both 32x32. Now I'm using Skelux & Kaze's model importer to replace individual body parts on Mario. The torso worked perfectly.
See that black tube? That's the upper right portion of Sonic's arm. I don't care that it's out of place, I can edit that whenever I want. I just want it to have the texture, or be the right color, or be able to have Mario's arms back and be able to edit those somehow...
The importer gives me this message.
I don't know where to go from here.