You don't put it in there, it can go pretty much anywhere else though. Well, it might work in there, but I've never tried that. Regardless, you use Texmod to use it.
You can download texmod here: http://www.tombraiderhub.com/tr7/mod...oad/texmod.zip
And to run it, do this, only for TFU, rather than Guild Wars: http://wiki.guildwars.com/wiki/Guide...#Running_a_mod
And yeah, try the exceptions thing.