no it is not baked 
For the lighting I am going to import it into Unreal Tournament 2004 unrealed3 to get the vertex lighting since it is easier just doing in the engine instead of selecting each vertex and using a color for it… Plus I do not have a clue how to do vertex lighting in max…
If we were able to add an alpha to the BMP we might be able to use shaders to make some hacked in lighting. But nope we only have two TGA alphas to work with 
Either way this has been fun lol. I have worked on a few games including UT2K4 with Epic and this is the first time I have had to do something with these restrictions. Just for these restrictions it got my mind working on how to do something that looks nice… And surprisingly you can do a good bit with that limited amount of texture work.