I know that .wal plugin is for PhotoShop only.
In the end, id din't work, but lets make textures part 3 paintshop pro and wally tutorial works !
You can still use PSP 7 for editing images especially for textures and use Wally after. PSP 7 doesen't save as a .wal file directly.
quake2.act for me was not like below, was in Plugins\Formats.
In Jasc Software Inc\Paint Shop Pro 7\Plugins\Formats folders :
In Jasc Software Inc\Paint Shop Pro 7\Palettes :
PSP 7 error :
llets make textures part 1 errors