You can't convert a PSD to an XMF. A PSD is a layered image file. AN XMF is a cal3d mesh. You want to save the PSD as a jpg or png and then apply it as a texture to a hair mesh from IMVU.

Hi, you will need to go into a program that can open a .psd file such as Adobe Photoshop and save the file as a .png, usually with transparency in tact.

After doing this you can then apply the .png image to a mesh such as a hair mesh. The .png with transparency means that the blending or opacity texture which defines areas such as the hair ends and hairline will appear as intended.

There are some versions of other 'paint' programs which are able to open and save .psd files, such as GIMP.

However, " You can also use GIMP to edit PSD files but could run into problems since it has issues recognizing complex layers and other advanced features that might have been used in Photoshop when the file was created. Paint.NET (with the Paint.NET PSD Plugin) is another free program like GIMP that can open PSD files."