Indeed, when IDL is applied, AO in lights should be OFF.

The AO node however applies AO on direct light even when it's not in the direct light itself, so that seems to be redundant too (like applying an AO light on a material with an AO node - having the AO effect baked in, that's double).

But the AO node itself has an option Evaluate in IDL, perhaps that's the switch you're looking for.

IMHO, the quality settings hierachy is

 - direct lights / direct shadows only

 - direct lights / AO on materials - as you don't need it on all surfaces, and speed up rendering

 - direct lights / AO on lights (then: disable/kill AO on materials, as it applies AO on all scene materials)

 - indrect lights (then: disable/kill AO on lights)

IMHO, applying nodes for things they are not meant for is the Great Poser Pitfall. Every time new features are introduced in new versions to handle specific lighting/material issues, one has to deal with the shortcuts and interim solututions for those issues in older scenes which by itself causes a backwards-compatibility problem. The classic example are materials using the Ambient slots to handle issues which are dealt with by gamma correction nowadays (in P10 as well now), but AO is another one.

In addition: RayBias lifts the (AO-)shadow just a bit away from the object to avoid artifacts by interference with the displacement from that same object. So from the images it seems to me that the street surface itself has its shadow raised a bit which makes it interfere with the decals, and should have its raybias minimized as is has no displacement. As the manual says: "Be aware that if your RayBias setting is too high, your shadows will migrate into the scene". This applies to the lights as well, via the MinBias setting.
Plus, I recall a forum threat having me and BB discussing the meaning of the RayBias / MinBias value, there was something with the units, whether they were / or were not related to your local Poser units setting.

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Usually I'm wrong. But to be effective and efficient, I don't need to be correct or accurate.

visit www.aRtBeeWeb.nl (works) or Missing Manuals (tutorials & reviews) - both need an update though