I've tried this and my models do not come out flatshaded, maybe some clarification would help.
5. Under the 'Groups' tab, uncheck 'Auto Smooth'.
This is sometimes already un-checked... I'm not quite sure what to do in these cases.
8. In the 'Tile texture mapper settings' window, just leave the default settings and click 'OK'.
What are your default settings? Because I have a feeling this is where it all goes wrong for some people.
My settings:
Mapping Type: Planar
Horizontal Coordinate Source: X
X repeat: 1
Vertical COordinate Source: Z
Y repeat: 1
Z repeat: Locked at 1
Coplanar faces Only: Un-checked
Also an interesting fact, if I follow all your steps but in the Texture Mapper, I check Mapping Type: Cubic instead of Planar and then export the model using the old exporter, it comes out semi-flatshaded (done with an old stuffty model made out of primitives, so the stuffty modeling might be the culprit for the crappy flatshading).
Using the old exporter isn't an option unfortunately, because of the name-size restrictions on Materials which forgets up animation sequences, so I would really like to get your technique working.