You can create great looking environments without shaders too. I reckon you know that and that's why you did not ask about shaders.

For starters you can try a few things. It mainly has to do with the default light settings of the level and material setting of the models. There are a few options you have. First make sure you give the models a skin with a material in the MED editor and also "dress" its surface with a texture if you want. If you don't give the model a material it will get a default material assigned to it by the engine (that's why it looks lit). You can also assign a shader in the effect option there if you want to and if you can find an appropriate one.

You then have a few options in the WED too when you place the model into your level and look at the entity properties. There are checkboxes for various flags. To get a good goaroud shading and "nice" 3D model look try turning off bright an turn on unlit. These flags and more can also ne set in an action that you assign to your model. Sometimes it seems to work better when setting the model flags in an action that has been assigned to the model. You can also play with the ambient and other material settings here.

Hope you get things working with these hints, good luck,
tindust

p.s. there might be some info that will help you at dynalights.com. It has a few free help files available in the download section.