I've got the same problems of not able able to run any of the mods with my Steam version of the game.
I've tried the whole process with renaming the original bladesoftime.exe to bladesoftimeOriginal.exe & then renaming TexMod.exe to bladesoftime.exe. (Making sure to set Compatibility mode to Windows XP SP2.)
I then go to Steam & click play (or even directly double-click on the new bladesoftime.exe).
This causes the TexMod main window to open up. But then, as soon as I click on the big folder icon to select an application, the TexMod window closes itself & nothing happens.
I even went out & bought another copy of the game on disc, but this one also requires Steam to play. So, when I try to install the game from disc, my Steam app opens up automatically. Steam then firstly installs the game from disk, and then goes online & downloads some updates. The final installed version of the game appears identical to the version that I first bought on Steam.
Is there some alternate to TexMod that could be used to run the Mod ?
Also, is there some version of the game that was issued on disk at some point in the past, which didn't require Steam to be installed? (The version that I bought is an Australian version, packaged together with another unrelated game called Gemini Wars.)