Select the mesh you wish to apply the skin to. Make sure you have it completely selected & not have it in sub object level.
Press M ( material editor ), either create or select your material.
"Apply" should not be ghosted aslong as you have the mesh selected. Now press Apply.
or..
Drag the sphere displaying your material onto the mesh where the cursor turns into a thick cross ( more like a + actually ) and let go.
If its not applying there you've done something wrong. And need to explain the problem better.
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