Hi Tiles, there is a simple answer to all your problems: Learn working with a 3D engine, by reading the manual!

First you need to read about that there are different types of entities in the entities chapter. All types have special purposes. For shadows you need level geometry, for terrain you need a terrain entity.

http://manual.conitec.net/wed_entities.htm

And when you get an error you should read in the manual what it means.

http://manual.conitec.net/engineerrors.htm

A mesh of > 64K faces is insanely big, and even if it could be rendered by your 3D card, it would be very slow. Most 3D cards can't render such a mesh size, and no commercial 3D game would use such big meshes, therefore I assume 3DGS forbids you to create such meshes right away. Do not import big terrain as level geometry, rather import it as a terrain entity.

Hope this helps you to soon create levels like a pro!