Modeling Introduction

[RaideX]

Why hello there... again.

I recently started to work my way through some modeling and i have some basic questions regarding the associated files and programs/plugins.

I know that blender (are there any better programs free of charge?) is a good program for modeling and it exports the model into meshes (.msh) then i should be able to see the model in frictionalgames' model editor. After that i'm guessing i need a .dds texture and apply it with the material editor to create a .mat file. That all together creates the .ent file in the model editor to use in the game.
(I think that's how it works, please correct me if i'm wrong)

Now to my basic questions:

• What excectly is "Collada"
  
• What are the .dae files used for
  
• What is the best way to texture something (In Blender directly? Or maybe a custom one created by hand with Photoshop?)