Applying an image to a sprite.

Sprites aren't really the best way to do cuts and blood on characters. They work well for bulletholes on walls, footprints on the ground, etc. but for stuff on characters you usually want to alter the texture of the model, possibly altering/swapping the main texture or possibly using masked textures on a new texture layer.

That said, applying an image to a sprite is just like applying a texture to any other entity. Seriously, use the command EntityTexture to apply the images to your sprites.