Skins are comprised of .m8 files. More specifically, there are three types of .m8's for skins. You'll have skin.m8 (what you wear most the time), skin_i.m8 (a picture of it for viewers like those at the top of the page (although not necessary, and some makers will intentionally leave out the _i file because it is their own personal skin)), and there are skinDmg.m8 (which are what shows up when you've been hit). These are specifically designed to wrap around the character.
You can't work with an .m8. You can, however, work with a bitmap. When converting to this working format, the skins are "unwrapped" and placed tightly into a 256 x 256 pixel square. For conservation of size, the parts are rather mixed up.
A. Armor piece over shoulder. The basic skin shows the Silver Armor, while the damaged skin shows the Gold Armor.
B. Back of armor over torso. For Corvus, this is one patch that is not mirrored, like the front and back of his unarmored torso..
C. Front of armor over torso. Note that Kiera's torso armor is one large wrap-around patch that is mirrored.
D. Corvus's right arm-guard. This patch is added to the mirrored left arm. Kiera does not have this.
E. The Storm Bow. The damaged skin shows the Phoenix Bow. These, and the Hellstaff, should not be altered, so that they match the models of the weapons awaiting pickup on the map levels.
F. The Bladestaff. The damaged skin shows the version of the powered Bladestaff (such as after a visit to a blade shrine).
G. Side of Corvus' torso armor. The damaged skin shows the Gold Armor.
H. Top of the foot.
Note: These pictures and descriptions are taken with permission from Wydraz's skinning tutorial.
To convert an .m8 to a bitmap, I use gfe. In gfe, you open the .m8 of your choice and then go to "Save image as..." It will save the image as a bitmap.
Now, you can edit it. You can use the Paint that comes with Windows, but it is extremely hard and time consuming. As a paint program I recommend Gimp (for Linux) or Gimp (for Windows). I've seen some beautiful skins made with Paint Shop Pro as well.
You will always work off a template, otherwise it will be like heck to find all those parts.
Once you've made your skin all pretty, you'll convert it back into an .m8. My favorite program for this is MipMaker. In MipMaker, go to >View >Project Information. The first box is the input path. You should hit browse and find the file where you have saved your skin. Then, in the "File Output Path," you should specify the directory ...\Heretic II\base\players\[male or female]. Click OK, Add, then Create, and your .bmp file should be an .m8 in the skins directory, ready for use.
THINGS TO REMEMBER - Your skin must be exactly 256 x 256 pixels, and MUST BE a 256-color bitmap before converting to m8 file type.