Still can't reproduce the error.

It's a strange error too: it says that Blender needs to be in object mode, but it is put into that mode (or rather pose mode, which works too) immediately before the exception is thrown. Yet your screenshot shows that you are in edit mode for some reason.

Try closing Blender, deleting/renaming the folder %appdata%\Blender Foundation\Blender\2.69, then reinstalling the Source Tools and importing again.

Could you upload the file for me, please.

I can't reproduce this at all.

You say that you are importing scout_morphs_low.dmx, but the SMD importer is running (not the DMX one). Are you sure that's the name of the file you're working with? Is it one of the files under sourcesdk_content\tf\modelsrc\player\scout\parts?

Don't see why it would. Try it and see!

You don't have to select all bones. You only have to move the root. I really don't understand what you're talking about, can you upload your blend somewhere?

BTW, the reason for ignoring object translation is to support having multiple objects side-by-side in a scene without them being offset from 0,0,0 when exported.

Use keyframe copy/paste in Curve Editor to do the transfer. I just tried it and it's a bit of a pain since unlike everything else in Blender bones are Y-up (you have to paste X/Y/Z individually) but it's doable.

An IK bone clearly wouldn't be connected to anything, but I don't see why it wouldn't have a parent.

Zappy is right, only pose animations are exported. Transfer the object animation to your armature's root bone.

What you could try is scaling/translating the whole mesh by some imperceptible amount.

Wrinkle values are determined by vertex movement distance, so no. You could export as KeyValues2 and hand-edit the DMX file if you wanted, though...