If you're like me and you didn't understand why it didn't work properly, here's a guide to mounting your game in gmod:
https://steamhost.cn/steamcommunity_com/sharedfiles/filedetails/?id=121098599

The main step that I missed is that I did not quit or restart gmod after enabling it, and thereby could not see the models or textures for NPCs.

I am copy-pasting this because there were absolutely zero answers from anyone in any of these discussions on this issue.