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I'm hoping this guide explains the changes to XenForo 1.2 templates more clearly:

http://xenforo.com/community/resources/a-guide-to-xenforo-1-2-and-templates.2115/

@[USER=15562]MattW[/USER] is spot on. Forget the TM system. Forget guiltar's TMS. Directly edit the template. Compare and merge later.