Thanks for the feedback, guys!
RHK, I've used your method for this. I modelling a sword in Blender and exported it in an OBJ file to Milkshape but when it loads in MS3D all of the textures are black. Is there any way to fix this? I've Googled it and most people say to do Face --> Smooth All, which restores some of the textures but there are very exaggerated shadows and the textures are all very light and shiny. So that's one issue. Another one is I just don't know how to "position" the model so it lines up properly with your in-game character model and isn't ridiculously big or small. I also don't know how to animate it to have actions in-game, or do I even need to do that? Again, any help is greatly appreciated!
Thanks again!
Sometimes this can be fixed by setting the diffuse and other three texture values to match the values of default (blank) textures that are created when you create a simple shape, such as a box.
As for scaling, the position will be determined by the mountPoint node. If you follow some ms3d/blockland rendering guides you can figure out how nodes/armatures work. For size, i suggest finding the resource page that has the full player dts model available for download. Don't remember where it is, but you might be able to find it if you search. The full player model is properly scaled, so you could use that to scale the model relative.
Animations are not required at all, and are purely cosmetic. It involves setting keyframes. A full video guide is available on youtube, created by blockland user ATwig. You should check it out