Model textures, for some unknown reason (bug?) don't show in WED's display. Instead, just a wireframe (default), solid, or textured mesh are shown. Textured mimics solid and only works for blocks).

As a side note, textures should always be a power of 2 for maximum compatibility. Oddballs (like 1280) get expanded to 2048 wasting video memory. Valid texture sizes have a width or height of any of these: 16, 32, 64, 128, 256, 512, 1024, 2048, and 4096. The two largest texture sizes work with newer video cards and textures should rarely go beyond 1024 on a side, unless mipmaps are used.