Shader Engine, black terrain, how to fix?

I'm playing around with the Milestone 4 version of the shader engine.

I have the starter.fps from Milestone 3.5 loading and running, however the only problem is, all of my terrain is black and when I move it kinda like flashes between white and black.

I thought maybe it wasn't finding my terrain textures, but the console doesn't say anything about that. I try to paint on new terrain, and it doesn't make any difference.

What do I need to change to make the terrain show up properly?

Thanks