I'm picking up a document, thus far, created by someone else who is unavailable for questioning.
I have a vague idea what is trying to be accomplished with this:
\clearpage
\begin{figure}[h!]
\psfrag{F}{$F_c$}
\psfrag{M}{$M_0$}
\psfrag{V}{$V$}
\psfrag{Y}{$Y$}
\psfrag{X}{$X$}
\psfrag{T}{Thin film}
\psfrag{A}{Adhesive layer}
\psfrag{R}{Rigid surface}
\includegraphics{figure1a}
\end{figure}
(there are 2 more figures, b and c then)
"Fig. 1 Schematic description....." for a bottom of the page caption.
I can latex it without error, but when I try to pdfltex ... it I get an error message that states:
I could not locate the file with any of the extensions: .png, .pdf, .jpg, .mps, .jpg, .jbig2, .jb, .PNG, .PDF, .JPG, .JPEG, .JBIG2, .JB2 Try typing <return> to proceed.
After latex, xdvi file displays the desired figure, but there is text scrunched up on the left of the page, to the left of the figure partially revealing "F_c" (in the proper format) through X on successive lines, then "Thin film, Adhesive layer", then "Rigid surface". To the right of the figure is the figures' designator letter (a).
Just above to figure in the left margin above "F_c" is a cut-off word, ending ing 'g', I think "g replacements".
When I pdflatex in order to create a PDF file, then getting the aforementioned error message, I just , through it. The resulting PDF is a blank page, save for the figures' letter designators, (a), (b), and (c) in a column down the center of the page with the "Fig.1..." caption at the bottom of the page.
The figure1a is in the same directory as the document files as figure1a.fig in addition to a figure1a.eps.
I've been able to come up with scant little help in the Leslie Lamport book.
Can you tell me what the psfrag business is all about?
I've imported figures in my own documents, but not in this fashion. I hate to re-tool this one if I can create something better and learn a new technique in the process.

pdflatexcan't handleepsfiles straightforwardly. It is looking for any of the listed file types. Convert theepsto apdffirst and try again. – Markus Oct 30 '14 at 14:05latexfor the figures and then convert the appropriate parts to PDF format forpdflatex. That's best done using some automation. – Joseph Wright Oct 30 '14 at 14:06psfragis intended to be used along thelatexroute. Not sure if the[pdf]workaround has any effect onpsfrag– Markus Oct 30 '14 at 14:48pdffragpackage? – Werner Oct 31 '14 at 14:23