It sounds like your DirectX origin is offset. I don't know how this happens or what could cause it.
Please load the world.scn. Then hit the "P" key to pause. Then load a model and hit the "I" key. Now using the numeric keypad, rotate around the model until you are as low as you can be and directly sideways to the model i.e. wing on, full sideways view. The model should be floating above the ground. Take a screenshot to share with us if you can. If any part of the model is below ground, we have a mystery.
What graphics card and driver version are you running? The latest Directx? It's really a mystery to me.
-- ggunners

