Well it seems you found a very complicated way to do something very simple!

When you want cartoon style, you wont achieve anything with material settings in MED. MED materials only have simple settings like transparency and so.

Just use the cartoon shader that comes with Gamestudio. You can edit this shader in real time with the shader viewer. You can also edit it while your game runs when you copy the shader in your work folder and use the AUTORELOAD material flag.