Using Lightwave Textures

I think the textures need to be in the same folder as the mesh. if that's not working, its a good possiblity, lightwave isn't storing the UV's on the model. Why don't you get the lightwave convertor, and save it as a .b3d file?

http://www.blitzbasic.com/sdkspecs/sdkspecs.php

I think Lee Pages convertor is the most functional. Sorry if i'm wrong on that. A guy i'm working with uses it and it works perfect :o)