FYI: If you use the "&" symbol (amongst a few others) in the first post, it cuts it after that point. The web team are working on fixing it

CryEngine3 doesn't support PhysX and it still uses it's own in-house physics engine as seen in CE1 and CE2. I'm not sure if there's been much/any updates to the physics engine since CE2 but there hasn't been anything mentioned about it.