This is a problem I've been trying to work out with Ello for the last couple of days. It seems to affect GeFOrce video cards.
I have a level that is generated entirely by script from map entities. The player model is then created inside the level and the material set.
The results of this are:
Cartoon Shader
Fur Shader (the Ploppy Shader -this one is cool)
These shaders work perfectly when the model is created in a regular level:

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I've asked a couple of others to try it. So far shaders only work for Fuxer with his ATI Radeon 9000 128MB. THey do not work with GeForce FX5600 256MB or GeForce FX5700 128MB. I'll have to ask what card Ello was running.
It seems that shaders do not work with map entities on some video cards.
Does anyone know a solution, or a work around for this? (other than buying a Radeon, something that works over a wide range of cards).