Originally posted by Papi:

You should put garrysmod folder inside your addon folder so it goes addon/garrysmod/models and addon/garrysmod/materials.
Hope it helps!

I found out the problem, it was cause I moved it out of the compiled folder by mistake :P Thanks for the help :)

I exported a model and put it in my root gmod models and materials folder and everything worked perfectly. I took them out to put in a .gma folder and now the materials aren't working on my model. I have a suspicion it has something to do with my folder layout, does anyone have any suggestions?

My layout is
C:\Users\User\Desktop\addon\materials\models - for the materials
C:\Users\User\Desktop\addon\models - for the models

The addon root folder is just the addon folder on the desktop, everything needed is in there