That's strange that it's not working for you. For what it's worth, maybe it's because I use Corel Photopaint, but I was never able to get the refresh after edit to work for me. I always save my .bmp (well, actually I use .jpg), then go back to dxtbmp and open my .bmp by navigating to where I saved it, and then save as and save it as the .dds file. If the last file you opened was the file you want to replace, it'll still have the right type of .dds as default.
Have you tried saving the file as a .dds in a different place (say the desktop), and then deleting the original file (or moving it to a third place for safekeeping, like a folder on the desktop called originals or something) and then moving over the .dds from the desktop to the right place? Definitely annoying, but if for some reason saving over files is not working, that might be a workaround, since you can't have two identical file names in the same directory.
Also what program are you using to save the .bmp as .dds over the original files? If you're not using dxtbmp, you could maybe try that, as it's free and has worked for a lot of people.
My last question is, if you save your file, and it corrupts your animal, have you ever tried to go back and open that file that you saved with dxtbmp? In other words, is it just corrupting the animal, or is the file actually so corrupted that no graphic editor can view it? Because if you can open the file with dxtbmp and it's just not working in ZT2 it's possible the problem might somehow be something else, like the wrong .dds format or something.
I hope that helps at least a little! :mellow: