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After a bit of troubleshooting, I've concluded the issue is with the fxdecal_bangs texture, as the fxdecal_scrapes appears to work fine.

I don't understand enough to alter the properties etc so I'm playing without the fxdecal_bangs texture for the time being.

Removed the textures and the game worked fine, but now I'm stuck with zero car damage textures :/

I too am receiving an infinite loading screen upon installation.