A few things: You must open the MDL with notepad++ (or any other advanced notepad that can read the file format) and change ISTD0 to ISTD, (there are a few of those use google to find the on you have)
Also a lot of people place it in the wrong folder, this is the working folder:
X:\Program Files\Steam\SteamApps\<username>\sourcesdk\bin\ep1 \bin\
It's because the decompiler is designed for older version of the source engine
Link with beter explanation:
http://www.facepunch.com/showthread.php?p=7724541