Yup, sounds right. Paint programs won't open DXT-type bitmap files as they tend to have an extra channel for reflections or transparency. Look for DXTBmp (it's a free download that you can find easily by googling) - this converts the image file to something that your paint program can use. You don't even need any advanced paint program like Photoshop - you can even use humble old MS Paint if you want to. Instructions for use are simple.
One tip - if you want to repaint and do it in stages rather than all at once, then save the files as 32-bit format from the selection menu. If you save the files as DXT, then the image will degrade each time you open it as the DXT formats are compressed and lose quality each time you open them up. Once you have your final painted texture, then save as DXT format if you need to.
Good luck.
