Cant find Texture file on load

I am having some diffculty. I have this little workflow that goes as follows;

make .wad in wally for Hammer;
Make the level then export into .map;
open it into QuArk then export to .dif;
Enjoy level in Torque; :)

I have done this in the past, and it seems the best way for me, because I cant hammer to export good, because I dont have the licence to set it up. (If someone knows how to set up hammer with to export to .dif with the demo than I would love it!)

Well my problem is that when I open my .map it says it cant find the textures. ("cant find FLOOR png or jpg");
I tried moving all the files that I had in the .wad into both texture directories for the QuArk. addons/Torque/base/textures/common/ and the other one.

Still no luck. I am pretty confused, because I had this working before, but I cant remember how to get it work. To restate the question; How to open .map files in QuArk that has .wad files?

Thanks!