I've got the materials flags sorted now, by unpacking the 4 byte int into a tuple, then converting to a binary string and with a little string massaging a gourad shaded material with a diffuse texture and a luminance texture looks like '100011'...
with each bit representing: 'kTexMapped,kGouraud,kFlat,kWire,kAdditive,kLuminance' (in reverse order)
As we discussed, it appears the 3dmax .mod exporter does not set the additive flag, I am most curious if the game engine will recognise it if set. (edit: I suspect it won't as there are structures for diffuse and luminace textures but not additive ones, but if a texture in the diffuse or luminance slot is also marked as additive - what will happen?)
I'm as far as adding materials, I've almost got it figured out.
It seems there are about 16 ways to skin the cat of texturing something and the .mod file format takes one approach (an old one), the architecture of the blender format is considerably more complicated...
The idea that comes to mind is material wrapped vs texture wrapped texturing. The .mod is something in-between.
As we discussed, the shading and other parameters are set by material in the .mod format but are set by texture in blender... I'm not 100% I've got it right, but I will by the time this is done.
Texturing is friggin complicated. This is not easy. I'm starting to get the hang of Python though. That's a good thing.