Yeah, because I didn't start with a fresh config.cfg anyways.
Right anyways, messed with cvars a bit and managed to get the shaders compiling, was probably related to the glsl shader option randomly turning itself off for no apparent reason.
Turns out it has nothing to do with the crazy lighting.
The problem is with the hardware lighting option.
The geomap works fine, lit all great with bumpmaps, pretty etc.
Battlescapes however, some issues occur.
Here's dynamic lights set to max 1, note the lack of any non-compiled lighting, including the plasma shot.
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Now here's the same shot with a different plasma bolt (this time offscreen to the right), with dynlight max set to 2.
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Here's a similar shot with no plasma bolts on max lights set to 7
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And finally here's a plasma shot on max lights 7.
Interesting to note that while the plasma bolt moved, the angle the 'reflections' on the edges of structures moved too.
Also, the fullbrightness of models increased with every step past 1 max light.