These are the steps I use for flatshading:
1. Select parts of the model
2. Have "auto-smooth" switched on in the smoothing group panel
3. Assign the selected parts to a smoothing group
4. Vertex -> unweld the selected parts
5. Switch off "auto-smooth" under the smoothing group panel
6. Vertex -> weld together
7. Export using DTS Plus (regular DTS exporter doesn't export flatshading properly)
They seem to work for me all the time, I've never had problems with them.
I'll try using my method on your model to see if it works, if it does I'll post the model flatshaded.