I would tend toward Option 2. For game animation I much prefer CharacterFX to 3D Studio Max. The Keyframe Editor is a neat and fast way to manipulate keyframes whereas working with keyframes in 3D Studio Max is buried under piles of menus or only one bone at a time.
Referring to your original post however using Milkshape involves the least exporting/converting of the model. Everything (modeling, texturing, animation) can be done within Milkshape and then exported directly to b3d file format. Milkshape just isn't ideal for any task; jack of all trades, master of none.
Referring to your original post however using Milkshape involves the least exporting/converting of the model. Everything (modeling, texturing, animation) can be done within Milkshape and then exported directly to b3d file format. Milkshape just isn't ideal for any task; jack of all trades, master of none.