Dynamic lights need vertices to act upon I think so if your wall meshes are only one quad (2 poly's or tri's) the light is probably not reaching the vert to act upon the scene on model objects.

Increase the tesselate functions a bit more in advanced build mode than default to improve light effects or increase the mesh for walls where dynamic lights need to effect them.
LOD wil help resolve lag issues if you start down that road, that is, heaps of model poly's in scene.