Before you start using any custom textures, make sure they are in a size whose dimensions are a power of 2 (32 x 32, 64 x 64, 128 x 32) or they will not appear in the game.

When Embrace is first installed, it will create a folder called Materials in the Vampire directory. This is where it will look for textures that have been added by the user. By default it also looks in LMaterials.nob so it can access the game's texture set. In the Textures menu in Embrace there are 5 sets listed: general, london, new_york, prague, and vienna. These are the sets in the .nob file.

You can add your own texture sets by creating a new folder inside Vampire/Materials. Right-click in the Materials window and in the pop-up menu select New, then Folder. For demonstration purposes I will call mine texpack, because I want to use a set of textures that I have downloaded from a great site for mappers - www.graphtallica.com.