Water:
Oh, it can too - nice.
I was more refering to being able to read what smoothing you set up in the .BLEND file and correctly interpret that when saving the .COB, but this is still cool.
As to what it should be as default, Auto-smooth with an angle of 32 is a good default I'd say.
Topgun:
Ok, when you have the model open in TS, bring up the material editor. (Should be a paint pallet icon bottom of the screen)
In the material editor window, one button up from the bottom is the smoothing control. Click and hold it and it will show you the options: Faceted, Auto-Faceted and Smooth. If you select Auto-Facet and then right click it, you will be given the option to change the autofacet angle. (32 is usually good for most things)
Every time you change the smoothing at all, TS will consider it to be a different material, but PCS2 will only look at what texture map it uses. What this means is that you could have one material applied to the whole ship, and then heaps of different smoothing types all over.
Say your ship had a cylindrical part that needed smoothing, while the rest was supposed to be auto-faceted. You would first set the material to auto-facet and apply it to the whole model. Then you would change to smooth and paint over the texture on the cylindrical part.
When you convert with PCS2, you should find that the model is autofaceted with the cylinder smoothed - and there you have two smoothgroups.
