The shader lighting will not be ready for a few releases while I make it handle every texturing combination (glowmaps, detailbumpmaps, etc.). There are still important bugs to fix first.
On my disappearing mouse issue I updated my drivers to 11.2 selected Morpological filtering as well as letting the applications chose settings and slid the Anti-aliasing mode to super-sample (there is no option to turn it off)
The standard method for anti-aliasing is multisampling. Super-sample is very slow, you should only use it for screenshots. I checked the catalyst drivers and found what you're talking about; it's possible to patch the game so that the cursor doesn't disappear with adaptive AA. It may take a while to figure it out.
It's amazing how such a small thing can make a big difference.
Lighting is actually the biggest deal in computer graphics, notwithstanding the effort of texture artists, modellers, and animators. Lighting is an important way to define surface curvature and the coherence of objects in a scene.
So normals will be possible with this new lighting?
Unfortunately not. Normal mapping requires the mesh to have tangent frame data, which gets passed to the shader. Morrowind has no idea what to do with such data, it wouldn't reach MGE XE.
Would this also totally solve NPC lighting issue? Even with MCP, I get NPCs who's lights don't light them up when they walk, or flicker a bit.
I'm not sure because there were several lighting bugs in the Morrowind engine. It probably is the 8 lights per object limit, though.
Tests using MGE SVN178:
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I've found a serious error I made in a function near your previous crash report. This may be the cause of your crashes, some hardware might not handle it so well. Expect an update later today.