Tesmu 2 is a mod installing, archiving and removing utility by Macgyver. http://planetelderscrolls.gamespy.com/View.php?view=utilities.detail&id=25.

When archiving a mod, you select the esp and it packs all of the dependant files (plugins, meshes, textures and icons) from your Data Files into a zip file.

My problem is that it doesn't seem to be able to archive textures from sub-folders although there doesn't seem to be any issues with meshes and icons that are in sub-folders.

Has anyone else encountered the same problem. Can anyone who has used this utility provide some insight or a solution?

Any help appreciated.

Bump.

Not using it, so help I can give is limited. I have not found the 100% perfect utility for packing/uninstalling mods already. I think last installing/uninstalling options included in Mash may be great, but you need to probably install/uninstall through it for it to work properly and I did not test it yet.
At present, the utility which seemed to work best for me (at least for packing mods, never did test properly the uninstall option) is Mental Elf's http://www.mentalelfz.com/tesfiles.html, maybe you could give it a try