I believe I have found the post Martindj was referring to:

http://www.renderosity.com/messages.ez?Form.ShowMessage=1067218

Sadly, still no cigar. The fix suggested only seems to work for the "Brad" Texture/MAT pack texture mentioned in the post. Same problem though.

I'm guessing the answer has something to do with the V3 material zones. If anyone understands how that fix worked, please let me know.