on my machine the mod creates a subdirectory called ".xvpics" in the shepherds directory.
There is a nereus1.tga among a few other files in there, so try if it works once you create the folder and move the files there.
The file in the .xvpics directory is much smaller(3.58kb) than the nereus1.tga in the shepherds directory(48 kb). So maybe you have the wrong one in the shepherds directory.
Hope it works so you can witness the awesomeness that my pretender is
.