Making indoor levels is just as easy (if not easier) than making outdoor levels.
Just make sure that when you are placing the blocks of the room that you are in 'grid placement' mode. You can use this by pressing 'B'. There are 3 levels of grid placement, 1 - free mode (doesn't align to grid at all, 2 - aligns to small increments of the grid, 3 - aligns to whole floor sections.
You need to use the largest (option 3), then all of the models will link together seamlessly.
I made the indoor level for the competition and had a bucket load of fun doing it!
ScienceBoy, I believe Rolfy achieved his results by baking out the textures in his modelling software (3DS Max) then he using the animate shader to animate the texture. Obviously, he had to animate the light entity as well. However, as we all know, Rolfy is Rolfy.
Cheers
Jay.