I have watched the videos -- but it doesn't say if you can create a G360 head from any image (like the King of spades example) or I have to make a head using the psd template for G3 characters. Please clarify! 

It is excatly how to create a 3G Character. either you can  Character export as PSD Template, or replace the Sprites in Composer mode.

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liebe Grüße vidi

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Thanks! So can I take a free bone G3 character and create a 360 head from the head image?

There are 360 Head  Examples in the free Bone section to explore 

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liebe Grüße vidi

meet us here

Thanks!