Alright, Ill just cut to the chase, What im trying to figure out is if any of you guys know how i can make spawn icons for NPC’s instead of seeing just a Purple square?
TIA if anyone can help 
Just like if there’s a certain file-type and where i have to place it.
There is no lua involved, you simply have to create materials\vgui\entities
ame_of_your_entity.vmt
Placing it in your addon is the simplest way to go. For an example just look at any addon which has a spawnicon.
Alright i understand that, but where am i going to be able to make the .vmt?
[editline]11:32PM[/editline]
Well, More Exact , How?
Using vtfedit :
http://nemesis.thewavelength.net/index.php?c=178
With that you can open .vmt and .vtf files, so it will be easy to learn from examples.