[Versed]

I use VTFedit to change the format. Also you need to put a copy of the picture into two different folders.

Steam/steamapps/(YourAccount)/Team Fortress 2/tf/materials/VGUI/logos/UI

The last three folders you may have to manually add a folder for. Someone on here can correct me if there's a different/easier way to do this. However, every custom spray I've had I have had to put in both the Logos AND the UI folder.

.tga's and .vtf's both work. I'm about 90% sure that .bmp will work as well.