*Finds out that his 1:1 copy of his damaged FS1 CD2 and his corrected backup of FS1 CD2 swapped cases* 
*Watches hallfight*
Ok, 4 of the soldiers have machine guns (one handed)
1 has a bigger two handed weapon, that has a grenade launcher-like explosive muzzle flash, and explodes upon impact. *watches again* However, there is no visible explosion up until the shivan dies. All impacts from the "grenade launcher" are off screen as far as I could see, but a small bit of the impact animation can be seen, it's white, like the muzzle flash. The last one is, however, a big yellow explosion, so it is likely that the Shivan exploded.
Are you sure that's not just impact sparks from bullets, though? I'm sort of wondering myself how much use a grenade launcher (or any explosive weapon) would be in that sort of situation - not fast moving Shivans, but in terms of a zero gravity, constricted environment on a presumably damaged ship.
I don't know what a grenade launcher muzzle flash looks like, so I'll take your word for it; I didn't even know they had a muzzle flash, I thought it was gas-compressed launching or something.
*watches with sound* I couldn't hear the small booms when the "grenade launcher" was fired (kept the volume down, it's 0.33 here).
It's possible that the power-down like sound that stops when the Shivan is killed was not the launcher.
I think it sounds like a rotary sound, but it could be some Shivan roar (not roar, exactly), as it's quite eerie. Hard to say, definately.
Perhaps the Grenade is rocket propelled...or something.
Yeah, but it's also quite fast, it's not like a slow rocket launcher. IMO it's a large cannon, like the Maxim. That would also explain why there's no big explosion when it hits, only a small impact animation. It's also possible that it's an ML-16 or something similar
I don't think so, for the reasons below - even though the model is IIRC quite a bit like the models for ship primaries. Mainly because the cutscene script from the ref bible doesn't mention a laser-wielding trooper, and that'd seem an unecessary detail to add unless it had some purpose.
It's most likely a gun similar to the maxim or any other laser. Don't forget that this is the in the future about 3 and a quarter centuries. A gernade launcher is highly outdated.
The machine guns were one of two things:
1) Do not fire ballistic projectiles (bullets)
2) Fire bullets with some sort of device that absorbs the recoil, allowing it to be one handed.
Also, it would need to be very light for one handed, which would severly limit ballistic ammunition.
RE:1; I believe one of the V employees did say they were ballistic weapons, as there were size issues with a power supply for portable laser weapons. I can't dredge up the post justnow, though - it was on the FDL (
http://www.descent-freespace.com/lists/fdl/) mailing list. Um, if you find it, you'll know

2; That would seem likely. Although I think they might hold the barrel anyways, and IIRC it fits over the whole forearm, so that might affect how much of an affect recoil has. I don't suppose anyone can enlighten me as to any differences upon firing a gun in zero-g versus normal gravity?
I'm thinking weight probably is not an issue, if the weapon is being used in a zero-g environment (assuming this is a weapon that was designed or altered for use in this type of space ops, of course); an issue would be the bulk of ammunition, although it's hard to judge given the size of weapon and that we don't know how much of that internal space is for ammo and how much for the various firing, etc, mechanisms.