using VSD, what format do i need to be aware of/look for when it comes to templates off the coffeecup site? HTML, CCS or will just about anything work?

Only themes made specifically for CoffeeCup Visual Site Designer will work with VSD.
Choose from these:
https://www.coffeecup.com/store/themes/ … -designer/

:-( and there lies the limitation of VSD, are all the colors ect editable in those templates? what about adding mouseovers ect...

Why is it a limitation that VSD doesn't use other editors templates? I don't get upset that I can't put Chevy parts on my Ford. Can Dreamweaver use VSD templates? Lets be fair.
You can tweak templates for VSD. I would make sure you have a photo editing program. Mouseovers are also achievable. What you want to happen on a mouseover will determine whether you can handle it in VSD or a photo editor.

The templates are only a starting point, call it painting by numbers

You can edit every single element

Or more to the point, with VSD you dont need a template at all, just put blocks where you want them, and buid your own template like using Lego

Here's one i knocked up for someone yesterday (attached)

And here it is in trial mode on Free CC hosting http://mwcwindows.coffeecup.com

VSD is a tool which you learn with very very quickly, play with it, i am not a coder, not experienced with web design, i usually work with a hammer a blowtorch and a file