Textures for Life is Feudal: Forest Village are stored in *.DDS format.
When you create new textures (or change existing ones), you need to convert them to *.DDS. Sadly not all *.DDS files will work. You can use the tool texconv.exe to create a working *.DDS file.
texconv.exe[ | ]
Place your texture in the same folder as texconv.exe. Start the command line (cmd.exe) and navigate into the folder (cd folderpath). Then use the following command to turn your texture into a *.DDS file that will work in the game:
texconv.exe -if CUBIC -sepalpha -f BC3_UNORM_SRGB yourtexture.png
You can download texconv.exe here.