I'll look into the lighting.
In the meantime,
To make sprites STAY facing the camera, set its pan & tilt to zero and leave them there.
To additive blend sprites, play with its BRIGHT, TRANSLUCENT flags and its .alpha settings.
Yes i managed to get it working using d3d_alpharef = 255; its quite fait though!
I also set the sprites pan and tilt to zero but it only follow the camera round in the x and y dimensions.... if i go above it it doesn't "look up" at me!
I also implemented the material code as you suggested, but can't actually see
any difference, and certainly no shadows drawn on the red landscape!