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Although the FNV mod manager is not completely updated to w@&k flawlessly with the game, it does w@&k well for me when following some basic guidelines.  First, the mod manager is very helpful in keeping your game folders clean and in good working order - here are specifics:

   
• Step 1 - open the package manager and click Add - then navigate to the .zip file of the mod you wish to add.
• Step 2 - Select it and it appears in the packages list.
• Step 3 - Click the Activate button and it will do it's magic to add all the mod files to your data folder.
• Step 4 - You simply then check the .esm or .esp to activate it and start playing.  (You can drag the .esp or .esm to a specific order in the list as recommended by the mod author.)

If your mod is in the form of a .7z or .rar, then you need to do a few extra steps:

   
• Step 1 - Extract all the mod files to a folder on your PC
• Step 2 - Open the package manager and click the Create from folder button
• Step 3 - Navigate to the mod folder you created, select it, and the mod manager will create the package as above.
• Step 4 - Activate, check the .esm/.esp and play.

The advantage of using the mod manager to do this is that if you deactivate the mod, the manager will delete the files from your data folder to clean up your game installation.

A few words of caution when applying any mod to the game:

   
• A mod that is a simple .esp or .esm file is the easiest to get rid of using the above methods - you can try any of these simple modifications and you can always easily return to vanilla with the mod manager.
• If the mod has a large file size, then it is likely that textures and or meshes are part of the package - the mod manager does not delete these files in all instances - you may be stuck with the modified textures on your disk.  They won't be used (unless they are texture/mesh replacers), but it makes your installation folders a bit more dirty.
• One way to create yourself a disaster recovery solution is to keep a copy of your FNV data folder (minus the large vanilla .bsa files) in a separate area of your hard disk - it will only consume 1.3 gb or so, and you can use this to bring your game right back to vanilla state.  Al you would need do to recover to vanilla is delete everything in your data folder except the vanilla .bsa files, and then copy your backup data folder contents into the game's data folder.

UPDATE 01-11-2011: FOMM has changed a bit, and is now even easier to use.  In fact, you can use FOMM to install even those mods that claim that FOMM will not install correctly.  Here's how I manage my mods:

   
• I created a folder in my Documents folder called !FNVMods - this is to store the .fomod files that FOMM creates - you will need to set this default location the first time you use FOMM.
• I created a second folder called !ModFolders - this is where all the extracted mods will be located
• After I download a mod, for example "WastelandDefense.zip" into the "Downloads" folder, I navigate to the !ModFolders folder and create a sub folder called "Wasteland Defense" (you can call it anything, but it is easiest to use a name that indicates what the mod does)
• I then open the downloaded "WastelandDefense.zip" file to see how it is structured.  If all I see is a .esp file, I simply extract that file to the sub folder (Wasteland Defense) I created above.
• Now it's time to load FOMM and click on the Package manager.
• Once the Package manager is open, choose "Create from folder" from the drop down of the top right button - a dialog opens which allows you to navigate to the Wasteland Defense folder I created above.
• FOMM will copy the contents of the folder into one of it's own .fomod files in the !FNVMods folder using this name: Wasteland Defense.fomod (notice the name of the file is the same as the name of your folder)
• Next, click the Activate button in the Package manager, then close the Package manager window - this returns you to the main FOMM window.
• You should see the .esp file checked and automatically paced at the bottom of the list - you can drag it to any position you like (useful if you have a certain load order in mind).
• Play the game!

If you decide that you don't want the mod any longer, you can click the Deactivate button in the Package manager, which will delete all of the mod files from the Data folder.

I have at least 20 mods installed of all kinds, new textures/meshes, map areas, quests, radio stations, game modifiers, etc.  FOMM manages the mods so well that I literally only need to click the Deactivate all button in the Package manager to return the game to vanilla state as evidenced by examining the folders.  Activating/deactivating/reactivating mods is a great way to troubleshoot a mod that you think might be giving you problems.

Tip: Changing individual files contained within .BSA archives

I'm using a mod that contains only a single .esp file and a single .bsa file (contains hundreds of individual textures and meshes).  This is the Underground Hideout mod, which is one of my favorites, but I dislike the way the mannequins appeared.  Here's how I changed their appearance:

   
• Using FOMM, I opened the .bsa file and extracted the contents to my Documents folder in a sub folder called "UH".
• Next, I navigated to the mannequins folder in the extracted folder tree and replaced the mannequin textures with ones I like.
• Finally, I used FOMM again to create a .bsa file from the contents of the "UH" folder, giving it the same name as the original .bsa file, in this case UHNV.bsa
• Then I copied the original .esp plus the new UHNV.bsa file just created into a folder called "UndergroundHideout" I created in my !ModFolders folder, then used FOMM to install the mod.

The next time I visited the hideout, the mannequins appeared just like I wanted.

Tip: How to delete mods completely from FOMM

FOMM keeps your mods in a specific location (in the example in the first post, I used !FNVMods for my mods folder.)

Here's how I handle mods I no longer use:

   
• If I want to stop using the mod, but might use it again in the future, I'll just deactivate it in the Package manager
• If I am completely done with the mod and want it to disappear:

   
• Deactivate the mod in the Package manager of FOMM, which removes everything from your FNV Data folder
• Close the Package manager
• Navigate to your !FNVMods folder
• Look for the name of the mod.fomod that you want to completely delete and send it to the recycle bin.

The next time you open the Package manager, it will not even appear in the list - it is completely gone.

Tip: How to handle the wide variety of mod packages

Here is an example of how the FNV data is structured on your hard disk:
[smg id=2686]

The root folder for all your mods is the Data folder.  Notice that there are two sub folders: textures and meshes that are often used by modders to replace vanilla components.

The simplest mods are those that contain a single .esp or .esm file.  The best way to install even these kinds of simple mods is by using the method described in the first post:

   
• Create a folder in !ModFolders using the name of the mod you are installing
• Extract the .esp or .esm into that folder
• Navigate to that folder using the Package manager Create from folder button
• Activate the mod

How about more difficult installations? Start with the same process: create a folder for your mod within !ModFolders   Then, you'll need to examine the contents of the mod file you downloaded to see how the modder packaged it - for instance, what if:

   
• You open the mod file archive you downloaded and all you see is a Data folder:  simple, double click the Data folder to navigate to it's contents, and copy all you see into your mod folder, then continue with the FOMM Package installation procedure
• You see an .esp or .esm file plus two sub folders called textures and meshes: again simple - copy all you see into your mod folder and do the FOMM package installation as above
• You see lots of folders and .esp files, plus a ReadMe that explains that you have choices - this is probably one of the more difficult installations, but easy if you keep your wits about you.  Carefully read the ReadMe and make the choice of option.  Then copy all of the files you need for your option into your mod folder and proceed with the FOMM package installation same as always.

The most important thing to remember is that all .esp, .esm files and all sub folders need to be placed in the Data folder, and that FOMM will create a package from a folder on your hard disk based on what it "sees" in your mod folder.  In other words, you can think of your mod folder being like the Data folder within the FNV file structure.

Tip: Understanding .esp and .esm files

An esm file is a master file that contains data that esp files rely upon.  For instance, all of the main vanilla master file is called FalloutNV.esm, and all files depend on that master.  These esm files are always placed first in the load order withon FOMM.

An esp file is a parameters file that relies on data in the esm file - these are always placed lower in the load order within FOMM.

If you experience a crash to desktop immediately on loading the game, suspect that you have an esp that is missing an esm - you can click the esp in FOMM to see what master it depends on, and adjust accordingly.

Tip: Understanding .bsa files

A bsa is a Bethesda archive file that contains compressed information that belongs within the Data game folder.  For instance, you could create a single bsa file that contains the sub folders textures, meshes, and sounds, each containing hundreds of files.  According to the developers, the bsa files are more efficient which translates into better performance.

In theory, if you have experimented with a dozen different mods, and you like each of them, you could combine all of their files into a single bsa for a really simple installation.