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That error message is perfectly normal and unfortunately a byproduct on how TTT works with custom entities, you can ignore that one.
1. Try creating a materials folder in your server's "garrysmod" folder. So it looks like:
"[your server's main folder]\garrysmod\materials\meme_gun\[whatever name you want].png"
I didn't realise that dedicated servers don't actually have a materials folder by default... my bad. I've updated the mod description to mention this. That alternate directory you shared could work as well, but I haven't tested that.
(Instead of that website, you can also just use your favourite image editor, like Gimp or Paint .NET, any size 512 x 512 or smaller should work)
3. Try is putting ttt_meme_gun_always_include_default_memes in your server console as a command, this will tell you the actual current value of this setting, and if it is 1, then there might be a problem with your server config.
4. Last if all else fails, just give your players the meme_gun folder directly and have them plop it into their Gmod install's materials folder. You will still need the meme_gun folder on your server as well, this just bypasses the need for the server to send the meme images over automatically.
The only thing I see in the console regarding this is:
"Refusing to load ent_meme_gun because it is missing Type and Base keys!"
Also when you say the server materials folder would it be the one under "\gamemodes\terrortown\content\materials"
I am not a professional server/gmod guy, but I can normally wang-jangle it into working, so maybe I'm just being dumb on this one. Either way, any help would be appreciated. In the last 6 years or I've set up TTT three times for my friends and I just wanna say your level of contribution is insanely appreciated. I hope you get thanked as much as you get asked for a sandbox version.
In short, plz help Mr. The Stig.