Correctly installing mods

Pre-Installation Setup

Before we can install any mods, we need to set up the game to install mods easier.

1. 	Go to your main Portal 2 game folder. (steamapps\common\Portal 2\portal2)
2. 	Open Gameinfo.txt.
3. 	Scroll down to the "SearchPaths" section. You will see "Game |gameinfo_path|."
4. 	Add a new line above the existing game line and write out "Game mods".
	The SearchPaths section should look like this now:
	SearchPaths
	{
		Game				MODS
		Game				|gameinfo_path|.
	}

5. 	Save the file and close it.
6. 	In the same folder, copy the following files/folders:
cfg (folder), SAVE (folder) demoheader.tmp, modelsounds.cache, stats.txt, voiceban.dt, gameinfo.txt and workshop_log.txt
7. 	Go out one folder, where you'll be able to see multiple "portal2_LANGUAGE" folders. 
8. 	Create a new folder called "mods".
9. 	Open the "mods" folder and paste your copied files/folders.
10.	Create a new folder called "pak01_dir".

You just created a new "Game update" except its not an official update, but your own with custom content.
This is way better than manually editing the original pak01_dir.vpk file with a text editor and less prone to break your game.

Installing Mods (old way)

When you download an old mod (or a mod by someone who doesn't know what they're doing) you will get a pak01_dir.vpk file and one or more folders.

Drop the folders and the pak01_dir.vpk in your "mods" folder.

That is all.
This way has a huge design flaw: the pak01_dir.vpk.
That file contains a lot of original game content that will overwrite any and all updates valve pushes onto Portal 2.
In other words, Old mods (or mods made by people who don't know what they're doing) are perfectly able from preventing your game to get updated.

Installing Mods (Proper way)

The proper way to install mods required the mod to be built the proper way in the first place.
One such mod being the Cannabis Door.
That mod only contains the modified materials and nothing else. 

To install a properly made mod, you need to:
1.	Paste the "pak01_dir" folder into your "Mods" folder. 
OR: Paste the materials, models... folder from the downloaded mod into your pak01_dir folder, which you should have by now.
2. 	Pack the pak01_dir folder into a vpk file using vpk.exe found in "steamapps\common\Portal 2\bin"
!!   This requires the Portal 2 Authoring tools to be installed from the Steam tools library   !!
Optional: Make a shortcut of vpk.exe in that mods folder, so you can drop the pak01_dir folder onto the shortcut.

We need to manually pack our own pak01_dir vpk to make installing multiple addons easier and prevent your mods from stopping game updates.

Finishing words

If you think you could just delete the pak01_dir.vpk from old/incorrectly made mods, you thought wrong.

Those mods usually modified the pak01_dir.vpk with a hex editor to load a completely different texture/model name.
The loose files in those downloaded materials folders will also contain renamed texture files.
Just deleting the pak01_dir vpk from those old mods will result in your game not reading the downloaded textures, as they have incorrect names.

IF you want to fix an old mod to work properly, you need to find out the original texture names and rename the textures from those mods to be correct again, then pack them into your own pak01_dir folder and pack yourself a new vpk.