(btw, it’s GCF - not GFC)
I would manually extract it from GCFs. I’ve found HLDSUpdateTool to be very buggy/not working at all with Episode 1 from other’s posts. I personally could not get it to work at all either.
There are multiple ways to extract content from GCF. The most popular, and the one I use is GCFScape.
Using your GCF extraction tool, extract content from the episodic folder in each of the GCFs listed below to your server’s orangebox/episodic folder. Create the episodic folder in orangebox if necessary. It will probably not be there unless HLDSUpdateTool actually partially did do the job.
The GCFs you need to extract are located in your Steam/SteamApps folder. You should extract the content in this order:
episode 1 shared.gcf
half-life 2 episode one.gcf (maps folder only - this GCF is not required if you do not want EP1 maps)
episodic 2007 shared.gcf
episode one 2007 content.gcf
If any files request an overwrite of an existing file, overwrite it. That’s why I told you to do it in a specific order.
Once you’ve extracted all the content, go back into episode one 2007 content.gcf and extract the contents of your hl2 folder into your orangebox/hl2 (make sure it’s the hl2 folder in orangebox, not in the server root) folder. This folder should already be there and again, overwrite if it asks.
When you’ve done, make sure you have that mountdepots.txt file shown in a previous post in your garrysmod/cfg folder. That is required AFAIK (it certainly doesn’t work for me without it).
If you run a Linux server, you may encounter issues with some files/folders not being in lowercase. But let’s only worry about that if you are running a Linux server.