So, is there no way to use this properly with Milkshape?
the brick needs to be sitting on top of the blender plane, i think
EDIT: should've probably said you have to export them as OBJ groups, lol
No, you just have no idea how to use milkshape. Google "basic milkshape tutorial" or something.
you don't export .blb files directly, nobodyyou have to export the .obj, then drag the .obj over the blbConverter.exe and use the .blb that comes out of that.