Quote: "i was wondering if i could use the entity maker to retexture stuff as shown in the video tutorial"
Depends on the model. If you just want to give the entire model a generic base texture then sure. You can just change the text inside the .fpe once you've exported a completed model aswell. The texure size can be either 256x256 or 512x512. In terms of the texture fitting, if it is a more complex model which requires texturing on different faces, you will need to create a UV texture map for it.
Quote: "What is the best/easyest to use moddeling program?"
Best = 3D Max
Easiest = Milkshape
Quote: "Where can i find a free texture creating program?"
Download GIMP from here
http://gimp-win.sourceforge.net/
Quote: "How would i animate a model that i make?"
Use either of the above applications (best/easiest)
Quote: "how would i put the finished model (Animated, textured and all that) into FPSC?"
Start here for 3D Max
http://www.fpscreator.com/characterstudio.html
Or here for Milkshape
http://forum.thegamecreators.com/?m=forum_view&t=62483&b=24
http://forum.thegamecreators.com/?m=forum_view&t=103749&b=3
There are other written and video tutorials around the forums which will help you if you hunt for them.