The $modelname line refers to the folder that it will compile to within the “Models” folder, not the “Materials” folder. That line is mainly for what you want to name your model when it’s compiled, as well as where you want it to compile to within the “Models” folder. Here’s an example from one of my old weapon compiles:
By proxy, the compiler would first look in the “Models” folder for another folder named “Ganryu”, and then it would look for another folder named “weapons”. If a folder doesn’t exist, the compiler will simply refuse to compile the model since it can’t find the appropriate directory. If it does find that folder in the location it’s pointed to however, it will compile the model (unless something else is causing a problem - that’s usually something involving one or more of the .SMD files being used for the compile) with the name that you gave it.
Your .QC requires that you state what file is going to be your “reference” for the compile itself. Without stating what the reference file is, your compiler might not be able to actually compile the model. Here’s another example from the same compile I mentioned before:
$model "studio" "w_rif_m16a4EOTech.smd"
Because of the $model line, the .QC is telling the compiler that it’s looking for that specific .SMD when it goes to compile the model. Again, without this line, your compiler might not be able to compile the model. I’ve heard of a few people that still managed to compile without the $model line included, but no names were actually given. It’s just generally safer to make sure you have this line, for the most part.
Cannonfodder’s StudioCompiler does still work. However, if I am remembering this correctly, you have to type out the directory and file name of your .QC when you go to compile the model. The same goes for if you are decompiling another model. The reason for this is mainly due to a bug in the program that has yet to be fixed, but it’s not likely to be fixed any time soon since Cannonfodder doesn’t work on the program anymore (at least. not from what I’ve seen).