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From HalfLife 2 Knowledge Base

If the Hammer Editor does not automatically configure itself after installing the Source SDK, follow these steps to manually configure it.

First Time Setup of Hammer

1. Run Hammer from the Source SDK Launcher.
   
   
2. When you see this message box, click the No button:
   
   
   
3. This Configure Hammer dialog should appear next:
   
   
   
4. Click on the topmost Edit button, next to the Configuration drop-down list. The Edit Game Configurations dialog appears:
   
   
   
5. Press Add button. This will open the Add a game dialog:
   
   
   
6. Type in "CounterStrike", "cstrike" or an equivalent to name your configuration. The exact name is unimportant, what's important is that it makes sense to you. Press OK to confirm your choice and close the dialog.
   
   
7. Press the Close button in the Edit Game Configurations dialog.
   
   
8. You should now be back in the Configure Hammer dialog with your entry in the Configuration drop-down list:
   
   
   
9. Press Add to the right of the Game Data files list. An Open dialog will appear:
   
   
   
10. Click on cstrike.fgd and then the Open button.
    
    
11. Now you'll be back in the Configure Hammer dialog with these fields filled out:
    
    
    
12. Type 0.25 into the Default texture scale field.
    
    
13. Under Game Executable Directory, hit Browse and go to where you have the SDK installed, for example:
    C:\Program Files\Valve\Steam\SteamApps\username\sourcesdk
    Where username should be your Steam Login name.
    
    
14. Under Game Directory, copy what you entered into Game Executable Directory, paste it into Game Directory, and add \cstrike_sample_content to the end, for example:
    
    C:\Program Files\Valve\Steam\SteamApps\username\sourcesdk\cstrike_sample_content
    
    Again, where username should be your Steam Login name.
    
    
15. Under Hammer Map Directory, copy what's in Game Directory and add \maps to the end, for example:
    
    C:\Program Files\Valve\Steam\SteamApps\username\sourcesdk\cstrike_sample_content\maps

Setting up the Build Programs

Click on the Build Programs tab:

1. Leave Game executable blank for now. There is a known issue with not being able to run compiled maps from inside the Hammer Editor. See Running Compiled Maps for more information on how to work around this issue.

1. For BSP executable, enter:
   
   C:\Program Files\Valve\Steam\SteamApps\username\sourcesdk\bin\vbsp.exe
   
   
2. For VIS executable, enter:
   
   C:\Program Files\Valve\Steam\SteamApps\username\sourcesdk\bin\vvis.exe
   
   
3. For RAD executable, enter:
   
   C:\Program Files\Valve\Steam\SteamApps\username\sourcesdk\bin\vrad.exe
   
   
4. For Place compiled maps in this directory before running the game, enter:
   C:\Program Files\Valve\Steam\SteamApps\username\sourcesdk\cstrike_sample_content\maps
   
5. Press OK. Hammer is now configured for use.