Okay this is the process I used for generating LOD...I tested it a few times...seems to be the only way I could get it working.
EDIT: Scratch that..... couldn't repeat it.
Something is seriously wrong, one moment I could make the textures, but now when I try and repeat it I cant get the textures to generate again.....gah!
@ Psilopat: can you write down when you did what at what points? I can't seem to get the ordering right for it.
Sorry for the delay, i have been though several try and i think CK generate corrupted textures, the diffuse look all the same 1/4 done and normals are flat...?
So i think combine tes4qlod and Oscape is the best thing to do for now, by that i mean, genreate all diffuse with tes4qlod and all normals with Oscape, Oscape crash for me when i make diffuse and i don't know for sure if tes4qlod is capable of reading height data in the esp so i use Oscape.
Since it require more testing i will continue... to test...
For tes4qlod the better is to add unrecognized textures like described in the readme :
4b. If you have custom textures:
If you are using any of your own textures on your landscape (i.e. not the ones with Oblivion or Shivering Isles or the original Fallout3, FalloutNew Vegas or Skyrim games), you'll need to convert them into 4x4 BMPs (either 24-bit or 32-bit) and copy them in to the tes4qlod_tex directory. TES4qLOD does not understand the DDS format, so needs them as BMPs. You can very easily convert all your DDS textures to 4x4 BMPs using the free utility, nconvert (http://perso.orange.fr/pierre.g/xnview/en_nconvert.html), which is very, very fast. Alternatively use DDSConvertor.
To convert all your DDS files to BMP, copy the textures in to the same dircetory as nconvert and type:
nconvert -out bmp -resize 4 4 *.dds
Then copy those .bmp files in to the tes4qlod_tex directory. You should preserve the directory structure that they exist in the Game's textures structure
Also, i don't have tried at this point to delete the .lod file generated when you generate texture with CK since i haven't seen that it was created, but i will. Maybe this is what the CK means by files already exist...
(In game with CK texture every thing LOD1 is quite purple, like their is no diffuse but lot much softer)
(far LOD render grey like their is a huge fog over textures)
(i'm currently finalising generating with Oscape and report when it's done)