MyLevel

MyLevel is a special package name in UnrealEd. If an [Unreal resource]? such as a texture or static mesh is listed as being in the package "MyLevel", that means it is embedded in the map, and not in a package file on your hard drive. The MyLevel file doesn't actually exist: the word "MyLevel" is a magic keyword that works as an alias for your map file itself. "MyLevel" is often called a pseudopackage.

It is in the MyLevel pseudo-package that you must import the level screenshot that the game displays in the map browser.

Overview

Pros

Easier to distribute a map as a single file. Reduces confusion and makes your map easy to install
Reduces clutter in the separate folders: this is by far the best solution if you just want one or two new textures for a map, instead of adding new files with each map with the increased possibility of errors.
Reduces File Size:

Zip file with a 255,0,0 color (pure red) 64x64 texture Mylevel package on the default cube builder: 1.85 K
Zip file with a 255,0,0 color (pure red) 64x64 texture in a separate package on the default cube builder: 2.06 K

Cons

Can't distribute the files seprately

that's an advantage: its easier for users to install maps. Of course, if one is using a whole custom texture pack such as RichRig, the pack should be included in the zipfile. Maybe if it's a very common pack a lighter download could be given too. On the other hand, there's that very neat site (url?) that can display the contents of zipfiles and packs without download.

This does not work for sounds in Ravenshield. It will just create a file in /sounds named MyLevel.sbo. This might work for 22khz mono and lower, but seriously 22khz? This isn't Duke Nukem 3D.

Instructions

Embedding new resources

create or import a new resource in UnrealEd, like a sound, a texture, or a class. When you are asked to give a package name, put "MyLevel". The case doesn't matter, so "mylevel", "MYLEVEL", "mYlEvEl", etc are all the same thing.
use the new resource somewhere in the current map. If this is not done, UnrealEd will discard it when the map is saved
save the map
DON'T save the MyLevel package. If you save it, bad things happen!

If you have a resource already used in a map, but residing in an existing package, moving it to MyLevel is somewhat harder. You generally need to export it and re-import it.

Embedding resources from existing packages

See Embedding Code. The same also works with .utx, .uax, or, .umx files.

For textures which are already used in a map:

export each one to PCX
reimport
use the Texture Replace tool, or SHIFT+T to select all surfaces of the same texture
reapply the MyLevel version of the same texture