One last comment for now (sorry for spamming your thread Kendras
): from MLF's and SquareSteelBar's screenies (thank you guys!) it is pretty obvious that the ambient occlusion texture is not rendered on top of the diffuse texture. I suspect the AO texture map to be blocked by the SpecularMask controller also applied to the reef material. Can someone please remove that controller together with its container from the file and/or move them below the "Reef1AO.tga" texture map, and repeat the test?
Another suspect is the "in-memory DX2/3 texture compression" flag that I checked both for the main and for the AO textures, but let's try with the SpecularMask controller first...
