With atmosphere off everything is turned off for the sky. Shadows, Ambient Color and Sky Dome Color still effect the objects in the scene. What might be the case here is that the sky dome color is set very light. Sky Dome color is like a very diffuse light shining straight down, which tends to illuminate horizontal surfaces (even if they are "inside"). A black Sky Dome turns it off. White is max and can completely wash out "ground" shadows. For a much better explanation, check out page 603 in RWB4. Also looks like the Soft Shadows is set too high. HTH - Dan