So I've once again been bested by my own incompetence... could anyone shed some light on some issues I'm having with icons and textures?

Issue 1) icons. I'm trying to make painting misc items/statics, and I'm not sure how to make an icon which actually looks like the painting.

I basically opened up the painting in the editor, took a screenshot, cropped it in a "square" ratio (I tried 1:1 and 32:32) to take a square-shaped segment to use as the icon. I then converted the cropped .jpg to a .dds file, assigned it to my mesh, and got a really weird monstrosity which actually looked different in the editor vs in game... but looked awful in both.

https://drive.google.com/file/d/0B0ss6y_pJT86YjUyaGUtY3AtYXM/view?usp=sharing. The icon in game: https://drive.google.com/file/d/0B0ss6y_pJT86SzBTS25QM1FwZWs/view?usp=sharing https://drive.google.com/file/d/0B0ss6y_pJT86SXZQZlRtbmd1N1U/view?usp=sharing.

Neither the editor or the in-game icon look anything like the square-cropped .dds texture (which was just a block of the painting in the middle).

So, how can I make icons which a) don't look revolting; and ii) are actually identifiable as referring to this particular painting? I tried looking for some tutorials, but the ones I found were either so old that even the Wayback Machine couldn't take me there, or referred to some weird terminology which I mistook for a discussion about glucagon-secreting cells in the pancreas (in other words, I couldn't understand it).

Issue 2) Converting image files to .dds format without losing image quality.

I've found a free program which allows me to convert image files into .dds which actually display in the CS/in-game (DXTB), but I've noticed that there's a huge loss of image clarity/quality between the .jpg and the .dds. Are there any other programs which can handle the conversion without losing image quality?

I've tried using a few programs suggested to me in the past, but I couldn't get them to work... paint.net was able to convert to .dds, but the files it produces don't show up in nifskope or the editor for some reason. Not sure if there's some option I'm missing, but I couldn't find any. The Texture Optimiser also seemed hit and miss -- some of the files it converted worked, but some didn't (and to be honest, the UI just seems bizarre to me -- I think it's more aimed at converting mass batches of textures than single image files).

when target image size (32x32px icon) is much smaller than original image size (painting) try resizing the original image, not cropping it. Cropping is like seeing image from a key hole

1) Try making the icons without mipmaps or better yet as TGA.

2) DDS is a http://www.buckarooshangar.com/flightgear/tut_dds.html. It was designed for low file size sacrifising quality. SO, I guess thats a futile battle.

As for DDS not appearing in NifSkope, the problem, I think, is the DDS format. Make sure the the DDS type is either DXT1 or DXT3 or DXT5. Paint.net has an option to change the DDS type while saving.

This thread may help:
http://www.gamesas.com/topic/1508043-how-do-you-create-item-icons/

You can also use DDS with no compression at all for icons IIRC. And do not get confused by weird looking icons in CS, that happens to me all the time.