Looks to me like the smoothing angle (as Djeser suggested). How high an angle did you try? Just for fun, turn it up to 359 and see what happens. Obviously, you don't really want the smoothing angle that high, but if it makes a difference, you'll know that's where the problem is. Another possibility... what lighting mode are you using? GI and radiosity could cause that if the quality setting isn't high enough. Good luck!