Materials not being applied to models

[JasperWB]

I have a feeling the answer to this lies somewhere around here but I just haven't been able to find it and it is frustrating the hell out of me.

Ok so I copied all of the models and materials for Portal 2 into my Episode 2 directory so I can use them in the regular Source SDK. I know there is probably a way to do that with the .fgd file in options but I was getting errors so I just did it the easy way and copied everything. So now all of the Portal 2 models show up in hammer and in the model viewer BUT none of the materials will. The materials are not being applied to the models so they are all checkerboarded and also the texture browser only displays all of the materials with the checkerboard thumbnail and applies them much the same when put on a brush.

What did I do wrong? I thought if anything the models might have a compatibility issue with the older SDK but they show up fine, its the materials that are not working. Maybe I should redo the whole thing with the .fgd files? Except when I add the portal 2 or even the regular portal .fgd from the Portal 2 files I get errors about Boolean values or something not existing and it simply does not work. Any help here would be appreciated.