A safe way to mod Dead Island is to go to your installation directory and enter the folder named "DI".

C:\Program Files (x86)\dead island\DI\

If you are using steam it should be in your steamapps folder:

C:\...\Steam\steamapps\common\dead island\DI

Once inside the folder you will see several files with a .pak extension. These files are simply zipped containers for the game's configuration files. You can open them with a program like 7-Zip or WinRAR. Once opened, navigate to the file you wish to edit, BUT DO NOT MODIFY IT HERE. Instead, extract .pak file to "My Documents" folder then navigate to your my documents folder and you will see a folder named "DeadIsland". Open it and you will find a folder named "out", which contains a folder named "Data".

Go back to 7-Zip and extract the file you want to modify into this folder in exactly the same place it is in the file. Meaning if it is inside a folder in the archive file, you must make a folder with the same name and extract the file into that folder. Ex:

Data0.pak\Data\Skills\logan_skills.xml

Goes in

C:\...\My Documents\DeadIsland\out\Data\Skills\logan_skills.xml

Once the file is copied you can modify it without risking corrupting your game files. The game will look in this directory and will load any files in here in place of the original in the .pak file.

Note: If you have set up your game to save your data in a place other than "My Documents", you have to put your new data folder in there.

If you can't find "DeadIsland" folder in "My Documents", simply go to your installation folder. Search for file FirstRun.scr. Usually this file available in folder "DI/Out". Put your "Data" folder there. Dead Island will search this FirstRun.scr file location to start. If "Data" folder found in FirstRun.scr location, the game will start with all file available in "Data" folder. If "Data" folder is not available, Dead Island will use data in .pak files.