This is great stuff Darwin.
Just to clarify a little more Pictures/races directory (everything stated there by Darwin is correct in my experience).
If the Pictures/Races directory exists, you have to put ALL the races you want to use in the game inside (including default ones). All races not found in the pictures/races directory will not be used in the game (you can't use them yourself and you can't add them with .emp files - it will cause an error)
However, for the default races you have to only put their .txt files, and the game will look for .bmp files in the default base directory.