Giving each texture a different blend mode produces a better result. I think it might be something to do with you changing the textures colour. Maybe to do with alpha values in the texture?
Graphics3D 640,480,0,2 Global firstTexture=CreateTexture(4,4) colourTex(firstTexture,255,0,0) Global shadowTexture=CreateTexture(4,4) TextureCoords shadowTexture,1 colourTex(shadowTexture,0,255,0) SetBuffer BackBuffer() sphere=CreateSphere(4) EntityTexture sphere,firstTexture ; Disable Line A TextureBlend firsttexture,1 EntityTexture sphere,shadowTexture,0,1 ; Disable Line B TextureBlend shadowtexture,3 camera=CreateCamera() PositionEntity sphere,0,0,4 Repeat RenderWorld Flip 0 Until KeyDown(1) Function colourTex(texture,r,g,b) SetBuffer TextureBuffer(texture) Color r,g,b For x=0 To TextureWidth(texture) For z=0 To TextureHeight(texture) Plot x,z Next Next SetBuffer BackBuffer() End Function