whenever I go to apply custom images to one of my items it says "Custom images failed to be applied to Robe Reason: You must have item possession of all entities you are attempting to apply to." I don't know what this means all the items are owned by me what do I do?

Items are a bit special in that anyone can walk off with them (unlike ships and other entities). As such, the code treats "possession" of them a bit differently when it comes to customs. The item needs to be on your character or in an entity you own (and maybe some other nuances/niches that I'm forgetting) in order to change its image.

Do you know the location of that item? Is it on an entity that you do not own?