I'm glad you've solved your problem - I guess my reply wasn't too clear to you as well.

I had eluded to the fact that if the program doesn't display the normals properly as MoI provides them, you're going to see the artifacts that you experienced and provided screen caps to show.

Yes, with XSI you have to make sure you read in the normals that MoI provides upon import.

I still at times find that Cinema 4D's display of MoI objects is cleaner than XSI's. Admittedly, I haven't tried v7.5 all that much since I've been focusing on C4D and Lightwave lately so I don't know if anything has been improved in this area...

-Will