Hopefully I can be a little help to you!
Quote: " when graphics option is set to highest on entities the textures seem to shrink and get all distorted"
This may be, and I repeat MAY be due to the "dividetexturesize = ?" in your setup file. In the current version it is set to 1 by default. In previous betas, it was set to 2 I believe. Try some different values in that parameter, save of course, and see if that helps your textures.
Quote: "Also i have noticed sometimes FPS will allow me to use more than one texture when importing from my modeler if i don't set one in the script."
The texture information is stored in the Direct x file automatically, and Reloaded will read and use that information if one is not specified in the fpe. This is normal, and yes you can use multiple textures that way. The downside of doing this, I think, is that we don't know if in the future Reloaded will continue to use that automatically. I would simply shy away from doing that at all, as that could be causing your error. It makes texturing more challenging, of course, but a 2048 x 2048 texture will give you the equivalent of 16 512 x 512 or 4 1024 x 1024 textures to work with, so it shouldn't be too difficult, just some image editing. Take care!
Don
EDIT: Just curious, what modeling software are you using?
EDIT #2: I just tried a few of my own wall segments with dividetexturesize = 1 and 2. I saw no difference. I am curious as to what is causing your issue. Gotta go to work soon, I'll ponder it all day! Could you possibly post a screen shot of the before?
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