how do i add the dds / image to my headshape in blender?

Been editing headshapes in blender, but I usually export and look at it in game or in the 3dmod tool. I've seen a bunch of previews with people use the texture of the faces on their headshape models in blender, but not sure of the steps to do this. Wondering what is the process to preview the model with the dds file you will use? I've searched in youtube and in this forum but can't fine anything on adding the texture. This would help me quicken my creation process.

Thanks in advance!

This might help:
http://www.youtube.com/watch?v=vhdPLtYx_gw

http://www.youtube.com/watch?v=3TmRUWhdKfI&feature=plcp

thanks guys, jao's helped a lot. he made pierce look like the nerlens noel