if they're like really really blurry you're probably just missing a flag. No MipMap, No Level of Detail, No Minimum MipMap and 8bit Alpha are required. Point Sample is optional (not selecting it is like some sort of antialiasing)
i've not used VTFedit in years. I use the paint.net vtf plug-in instead which saves them directly as VTFs
DL: pdnvtfplugin111 on http://nemesis.thewavelength.net/files/files/
instructions: https://imgur.com/a/V4M7fDY