1. The image files (*.jpg, of course) are all in a subdirectory, named TK, in the same directory where you keep all of the other sets' and expansions' images.
2. Make sure that the <*> as indicated above is spelled exactly the same as the token name (like any card and its corresponding image).
IOW, treat all token art as though "Tokens" is another expansion, in an images directory named "TK"
Hope that helps.
BTW, I also have an issue or two with token art. I generated a token image or two (for example, Marit Lage), and did all of the above. I can see the image is picked up by the card just fine when I'm in deck viewing and editing mode, but it doesn't show up while in Play mode.
MWS shows token pictures based on the token's power and name.
Let's say you have two pictures in TK (the Tokens folder).
One is Goblin.full.jpg and the other is Goblin1.full.jpg (notice "Goblin1" has no space).
Goblin1.full.jpg will show up for any Goblin token with power 1 (whether it is 4/1, 4/2, 4/3, 4/4, etc).
For all other Goblin tokens, MWS uses the generic picture Goblin.full.jpg.
Finally, MWS only matches the token's power and the number if there are no spaces. Goblin1.full.jpg shows up for all 1/X Goblin tokens.
NOW, if you rename the picture to Goblin 1.full.jpg (notice the space), it will only show up for tokens named Goblin 1.
That is how I use multiple pictures for my tokens. If I want to put out three different pictures, then I make three different tokens: Beast, Beast 1, and Beast 2. Even though all three are 4/4 tokens, they have different pictures because of the names.
HOW-TO USE CROPPED SPLIT CARDS
"BTW, I've often noticed you use to avoid putting split cards as cropped. Maybe you're not aware that MWS supports crops for split cards? It's just a bit tricky: you need to have a 312x445 pic. MWS will cut the 2 pics out of the jpg and use them to build the cropped card. For pre8th templates, MWS used to cut the card correctly, but with the post 8th layout, that's not true, and you need to edit the pics a little by shifting them aside."
Tokens How-to mostly from a post by Strovil.
Cropped split cards info from Malhavoc.