1. Depends on the level editor. If you are using something like Cartography Shop that exports to .x then you can just use LOAD OBJECT. If you are using one of the Quake of Half Life level editors then you'll need to convert the .bsp or .map or whatever to a .x then use LOAD OBJECT. If you are using one of the level editors made by people on here then there is usually instructions in the program on how to use your creations in a program. Most of what I mentioned up there is 3d. For 2d just follow whatever instructions came with the level editor; however, 2d level editors are not common.
2.To do SPRITE (2 dimensional graphics) collision you can either use the sprite collision commands (sprite hit, etc. etc.), or use math to do the collision. This involves checking the x and y coordinates and sizes of one sprite with another to see if they are touching/overlapping. To do 3d collisions there are a set of 3d collision commands as well as third-party dlls you can use in your program to make collision easier.
3. The best level editor is really a matter of preference. Ideally the best is one you or if you have other people working one of them wrote specifically for the game you are making. Of course, that takes a LONG time.
Some 3d Level Editors (*requires game such as Quake/HalfLife, or file converter)
UnrealEd(need Unreal/Unreal Tournament+file converter)
Quark*(HalfLife/Quake+file converter)
Hammer*(HalfLife/Quake+file converter)
Bsp*(HalfLife/Quake/Other game that uses .bsp files+file converter)
Cartography Shop(on this site)
Level Maker 3d(in showcase on this site)
3d Map Editor(in showcase on this site)
Total Terrain*(need heightmap reader, could program yourself for matrices)
MagicWorld(in showcase on this site)
MilkShape3d(technically a 3d modeller, but same basic functions as level editor)
Multiscape(check out the Program Announcements board)
DeleD(search forums for DeleD, designed to be level editor+modeller)
Best 2d Program Ever for No Money
MS Paint
Professional 2d Programs, Expensive
Paint Shop Pro
Adobe Photoshop
Be sure to check out "The Game Programming Kit for Beginners" at the top of this board.
Crazy Donut Productions, Current Project: KillZone
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