Well first of all you dont need to extract the entire pak0 file into your mod folder in order to get custom sounds to work. The sounds other than the custom ones will just be called upon from the original valve (or gearbox if this is an op4 mod) folder.
I guess my suggestion would be to take a look at your mod set-up. Make sure the folders are arranged properly.
And get a 3rd party compiler. It'll make everything a shitton easier. Might i reccommend
the compilator. It's made in-house by THE MIGHTY ATOM and i've been using it since it's debut.
Then you wont have to deal with hammers schenegans.
Just export to .map, load it up with the compilator, and have a go.