In the Options sub-menu, ensure that is selected. Click Decompile .
Which (Blender, Maya, 3ds Max, etc.) do you plan to use for the final OBJ file?
The most reliable method to extract VVD data to OBJ with maximum fidelity involves using Crowbar (a advanced Source Engine modding tool) alongside Blender and the SourceIO plugin. Step 1: Decompile the Source Files Using Crowbar
Here is a comprehensive guide on achieving maximum quality during a VVD to OBJ conversion. Mastering VVD to OBJ Conversion for Extra Quality