A skin is a directory, in the right place; the directory name is what is offered in the skin-picker in the menu
(I'm distracted by a meeting, so blabbing below, hope it makes sense)
As long as the conf and graphcis are all there, it should work; I keep forgetting if I included the fallback code .. ie: if a skin is bad, it should return to the default skin, so that it will restart and work. Usually you can just ejecty your SD to get the nand defaults back, if you buffer it up
Or does it just blow up and need a reflash? If I didn't get that code in, I really should
when skinning I usually switch to xfce and then run mmenu from the shell ("mmenu", hit ESCape to kill it quick), so you cqn quickly bring it up to see hwo your changes are looking..
Anyway, you can customize the artwork and fonts and sizes and spacing and all that, and a ltitle bit about the position and sizing of the menus.. it is not super flexible, but its flexible enough for you to adjust the look entirely, within a certain range of how it currently lays out, if you catch my drift. (ie: You can't say that the Select menu comes up in a horizontal bar, but you can move it around a little ro resize it, that sort of thing. You can specify the number of rows and columns and spaving, and icon sizes and text sizes, etc, to adjust how the main grid and lists look, so if you want to really cram things in tight, no problem. (It scales all the artwork as specified in yoru conf files.)
Here is an old skinning guide I made up, it should mostly apply; I would suggest getting the canonicle built in skin(s) and copying them to SD (with a new directory name to avoid conflict) and then altering it a bit at a time. This way its no risk -- uif o ubugger things up, just eject your SD and reboot and the built in skin can come up..
http://www.gp32x.de/board/index.php?/topic/53990-skinning-minimenu/