Well better forget this about the material, I dont see how it can help you when you assign the same material that model has anyway?

Static Lights that you place in WED can throw shadows on the textures of your level walls but not on model textures. Models are external files and get their texture in the model editor and this texture is not going to be changed by whatever is in your level, so they are only uniformly lit by your static lights.

What you need for models is a Dynamic Light, that is another entity nearby with its lightrange parameter set to the range that the light should have, like 500 or so.

action dynamiclight() { my.lightrange = 500; }