Which options, sir? I went into my vbulletin options for this mod and did not see as you say "a big field with according description and most probably already a "path" of a previous release of this product. Just add as many items you need."

It is the "Ignore" field.

So, just put the URL of a site or sites in the Ignore field and my hotlink error message WILL show on the offending site and NOT show on my site (on my site the hotlink image was replacing the image which was hotlinked to begin with)?

If you insert the host in the ignore field, the images will not be imported. What they will show, in the end, depends on the site from where you try to show images. Which essentially may be hotlink blockers or anything else :)

I hope I'm using the proper terminology. Because you answered my question and now you're saying that this isn't the solution.

Here's the problem with this mod and hot linking (unless I'm doing something wrong but I tested it).

On MY site if I place a hot link image error to show up on the offending site which has grabbed an image from my site. The error image shows BUT the mod also replaces the image on my site with the error image.

Only want the error image to show on the offending site (obviously).

If I don't include an error image the offending site gets a blank screen and the image on my site stays intact. That's fine right? Shows it's working!

Thanks for your help!

This is simply impossible. If you show a hotlink image to other sites, your site must remain unaffected. This is a server issue and must be setup correctly in the .htaccess file, and never was an issue with the mod.

If the offending site gets a blank screen, then definitively your hotlink formula isn't working. Get Firebug for Firefox and check the response on the "missing" image, I'm almost 100% sure it's an error 5xx, which translates in a scripting error in .htaccess.

The mod does only download images from other sites, and if they have hotlinking images, it will download those, unless you have them excluded = ignored :)

Here's my .htaccess in regards to this situation

RewriteEngine on
RewriteCond %{HTTP_REFERER} !^$
RewriteCond %{HTTP_REFERER} !^http(s)?://(www\.)?domain.com [NC]
RewriteCond %{HTTP_REFERER} !^http(s)?://(www\.)?domain.com/forums [NC]
RewriteRule \.(jpg|jpeg|png|gif)$ - [NC,F,L]

Provided that domain.com is your domain, your hotlink protection must look this way. Please see the additional backslash, no second line needed and no fancy queries. It's your site and you know how it can be addressed, so make it short and simple. The missing additional backslash and unsupported fancy queries may cause a blank screen. The F directive does generate a failure, the rest should be shown correctly on the offending page:
If you used this tool: http://www.htaccesstools.com/hotlink-protection/ for generation, it does not work correctly and it is a shame, but fortunately not mine.

The above rules says: If the referer is not blank and if it starts with http://www.domain.com then fail on these file extensions: .jpg, .jpeg, .png and .gif. This means in cleartext, if the referrer is blank or the referer starts with http://www.domain.com, then the images are shown. Direct page access will thus show the images, but if you are navigating the offending site, they will not.

I hope this extra lecture was exhaustive enough and has really nothing to do with the mod. :)

Will this mod pickup changes?

i.e. if someone links an image and then a few days later changes the image (but not the filename) will this mod recognize that?

Followup: if so, will it overwrite the locally stored image or create an additional one with a -1 or something.

The best way to know is to try it out. There are too many scenarios about this argument to efficiently give an answer. Generally, it imports images from external servers to local. What you do in local with these files, is your responsibility, but users have no influence. What people do on remote sites is beyond our possibilities :)