I have no idea where you guys are getting the idea that the LODs have to be 0.
100 works fine, so does 0. Just don't do anything between. Because that defines a set distance of view-ability.
A couple things to note.
1. Make sure your groups are all different names.
2. Make sure your material names match the .png/.jpg files you have in your add-on directory.
3. Make sure you're using the torque exporter plus.
Sorry Pan, got bored.
http://i.imgur.com/0cJKAP1.png
You see the top <none> button?
Click that, and browse a color file. (Preferably a 16x16 file)
Then when you export it, they should come out with the dts to color it properly. Coloring it in milkshape will not work.
Edit: Also oops skype got in the way
That step is not necessary.
You can simply create 16x16 .png or .jpg files and throw them in. As long as they're all solid color.
I attached the three I used to make it easier.
Should be like this.
Add-ons/...
Weapon_laser2/...
blue.png
yellow.png
orange.png
laser.dts
sever.cs