[Edi]

I use Crimson Editor for text files (or the .dm files). A very powerful text editor for that sort of purpose, so much better than Notepad that I haven't used Notepad for years. Also allows you to keep severl files open in separate tabs at the same time.

For graphics that you might want to make, Paint, GIMP, PAintshop and other image processing programs, depending on what you want to do and how many features you need.

That, and reading the mod manual AND reading mod files somebody has already created (e.g. Juzza's Tarent mod, the Complete Balance mod or any other) to give you an idea of how to do it.

If you can use a text editor and know how to read instructions, you can mod the game. And you can always ask for more help here.