SUMMARY
This tutorial explains how to create an additional recolour for a Sims2 object, using SimPE's Object Workshop. This is an alternative, more complete procedure, than the Wizards of SimPE: the Wizards only work with Maxis objects, and doesn't let you to edit anything else than the textures, while the Object Workshop can be used for recolouring custom objects, add transparency to textures and many other things.
NOTE: in the pictures, the RED references are related to the tutorial, while the GREEN text and boxes are informative only, and refer to the additional HINTS and FAQs provided in this post.

This tutorial is also provided in PDF format. To view it, we strongly suggest to download the Foxisoft PFD Viewer: it's free and small, less than 1Mb!
Added Thai translation by Sweetsnut, in RTF format (readable with Windows' WordPad)
Added Italian translation by MaryLou: it can be found in this web page (EXTERNAL LINK)
Added Spanish translation by Angelskin, in Word DOC format
Added Norwegian version by Ghostsim: it can be found in this web page (EXTERNAL LINK)
Added Czech version by M-I-A: it can be found in this web page (EXTERNAL LINK - Select the czech flag)
Added Brazilian (Portuguese) version by Topz: it can be found on this forum (EXTERNAL LINK - Free registration required)
Added French version by Nan: it can be found in this web page (EXTERNAL LINK)
Added German translation by Magicdawn, in PDF format

WHAT YOU NEED:

1. SimPE: get the latest version at sims.ambertation.de; this tutorial applies to SimPE v.50b and newer.
2. The CEP: get the latest version from the official CEP page; without the CEP, many Maxis object can't be fully recoloured, or aren't recolourable at all.
3. The "Legacy" Nvidia DDS Utilities: get them from this page (the download link is at the very bottom of the page) and install them, just like any Windows program; then, start SimPE, select the menu Extra / Preferences and fill in the field "Nvidia DDS Tools" with the exact installation path (you can use the "Browse" button to easier find the exact folder where the DDS Utilities are installed).

STEP 1 - START OBJECT WORKSHOP
There are different ways to start Object Workshop; the best way is to use the "Object Workshop" button located at the bottom of the screen; if you can't see it, select the menu Window / Object Workshop. (Don't confuse this menu entry with the one located in "Tools / Object Creation": that is a different version of OW that doesn't provide all the features of the main one).
Then click the Start button.

HINT: Use the "Start" button to recolour Maxis objects; use the "Open" button to recolour custom objects.

STEP 2 - CREATING THE RECOLOUR PACKAGE
When you click the Start button, SimPE loads all the available objects (just wait a minute for SimPE to load them all). When the object list is ready, you can select the object you want to recolour; in this tutorial, we'll recolour the "4by4 Designer Chandelier", located into Lighting -> CeilingLamp. Open the "Lighting" category and "CeilingLamp" sub-category by clicking on the "+" mark, as shown in picture. Then click Next

FAQ: SimPE tries to understand to which EP the object is related, but this feature is still faulty: ignore that information.

After having hit "Next", you are given the choice to recolour or clone the chosen object. The default option is "Recolour": don't change it, just click Start.

The "Save As..." window opens up: choose a suitable name for your recolour package and click "Save".

In the "Subset Selection" window you can choose which parts of the object you want to recolour. NOTE: the "Subset Selection" windows doesn't appear if the object has only one recolourable part.
In this tutorial, we are going to recolour only the "Shade" of the lamp, and therefore you have to uncheck the "Metal" subset; leave checked the "Shade" subset and click "OK".

FAQ: Some objects, like the lamp that we are going to recolour, are multi-state, i.e. they can be clean/dirty, or lit/unlit; in these cases, the subset is composed by two or more textures; this is graphically represented in the Subset Selection window by an orange mark on the texture, reporting the number of alternative textures that the subset is composed of.

STEP 3 - REPLACING THE TEXTURES
In a matter of seconds, the recolour package is created and opened for you to edit.
Select the Plugin button in the bottom of the screen, then select Texture Images (TXTR) in the Resource Tree. In the right part of the window, you'll see two "Texture Image" entries: they are two because, as we have seen, the lamp has two alternative textures, for the "lit" and "unlit" state.
Let's begin selecting the first entry, that refers to the "unlit" texture; as you select it, the actual texture will be displayed in the bottom part of the screen.
Click the Export button.

Save the texture somewhere on your hard disk (you can optionally assign a custom name, but it's not necessary).

HINT: The best choice is to save the image in .png format, because the alpha channel (that stores information about the texture transparency, if any) will be stored along with the image; but if your favourite paint program doesn't support the .png images, you can save in .bmp format. Note: if you change the format to .bmp, you have to manually add the ".bmp" extension to the filename!

When you have edited and saved the texture, it's time to import it back into SimPE.
Right-click on the image and choose Build DXT.

The DDS Builder window will open up. Click Open and browse to your edited image. Before building the image, check the Format drop-down list, in the DDS window and choose DXT1 format. Then click Build, and your image will be loaded into SimPE, replacing the original one. COMMIT AND SAVE.

HINT: In the DDS window, you should always check the "Format" field, and choose the most suitable format for your image: the most used formats are "DXT1" for opaque images (that do no have any transparecy) and "DXT3" (for images with transparency) The other formats are rarely used: select them only if you have a specific reason for doing so.

HINT: The default option for the "Sharpen" selector is "Smoothen"; in most cases, you will get better results changing it to "None".

FAQ: Why should you use the DDS utilities, instead of the easier "Import" button? Because the DDS utilities, in most cases, ensure a better looking result (the "Import" button uses a compression routine that tends to lose details, thus creating inaccurate textures); this is mostly true with transparent textures. Moreover, the DDS utilities let you import images with different sizes than the original one, which is impossible with the standard "Import" function. The only case where the Import is better is when the image has a high contrast and very neat separation between the different colours (e.g. cartoons, logos...)

Repeat the step 3, replacing the second texture in the package, the one used for the "lit" state of the lamp. When editing it, remember to make it a little brighter that the "unlit" one. Import the edited image into SimPe using the DDS utilities, as explained above. COMMIT AND SAVE again.


The recolour is finished
Copy the package into the downloads folder and fire up the game: your brand new colour option will be available in the Buy Mode catalog, when selecting the "4by4 Designer Chandelier" ceiling lamp.






OTHER USEFUL RESOURCES

Designing Beddings (Double and Single) - Beginner Level - by Tiggerypum
Recolouring object with Wizard of SimPE - Beginner Level - by DeeDee (at SimPE site)
Enabling transparency on textures - Beginner level - by Mike190870
A broken glass for your windows - Beginner Level - by Numenor
Creating animated recolours - Intermediate Level - by JWoods
Understanding the TXTR and the MipMaps - Intermediate Level - by JWoods