Success!

Okay, so this is kind of a random process but it seemed to work. This is exactly what I did to get it to render correctly even with all shaders enabled and post processing enabled.
FPSC seems pretty buggy but still I really like this software. Each bug can be taken care of.
Here's the random procedure:
1. Disable Shaders from within FPSC "Preferences" Menu.
2. Test your level to see if the model appears correct.
3. Save and Exit FPSC.
4. Go back into FPSC.
5. Enable Shaders from within FPSC "Preferences" Menu.
6. Test your level. The models will appear illuminated and bright.
7. Exit Test mode and right click on the entity that appears bright.
8. Change StaticMode = Yes to StaticMode = No. This will make your entity a dynamic object.
9. Test your level. And your entity should render fine in test mode.
10. Save and Exit FPSC.
11. Open setup.ini in your FPSC directory. (open in Notepad or your text editor of choice)
12. Look for postprocessing=1 and change it to postprocessing=0.
13. Save setup.ini.
14. Go back into FPSC and test your level.
15. Models should appear correctly.
16. Exit FPSC.
17. Edit setup.ini again and change postprocessing=0 to postprocessing=1. Save and close setup.ini
18. Go back into FPSC and open your level with the entity that appears bright.
19. Right click on the entity and change StaticMode=No to StaticMode=Yes.
20. Test your level and you should have a model that isn't so bright it makes your eyes want to shrivel up like a raisin.
As I mentioned before, I know this is a long and extremely random process. But it worked for me so I hope it can help someone else.
I'm going to post some screenshots to show your what I've done with this terrain.