You're probably right about everything you said BroodKiller.
TERRAINFIGHTER, good find, I think you have solved it, because it now explains all the effects that you listed there.
All of the palette errors are probably Arsenal III-corruption related. Especially the ones where units have themselves as their shadow, almost any change to images.dat in Arsenal III will cause that.
All of the other ones in your list except for point 12 ("if unchecked for a unit with a attached turret they wont appear") can be explained because the iscript doesn't run, and so the necessary sigorders don't get run.
I don't remember the iscript for turretted units, but I wasn't aware that it was required that the iscript send some kind of sigorder command to make a turret appear. So perhaps disabling turrets is a secondary effect.
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f unchecked for engine overlays, they won't be removed when the unit stops moving
This is really good at describing why the heck they have this command. It's all clear to me now. The floats box exists to assist the iscript in doing its job.
First I'll explain why the Wraith's engine overlays aren't removed. This occurs because the Wraith engine overlays are removed because of their iscript. If you look at the engine overlay iscript, on non-movement animations the iscript will call an "end" command which removes the engine overlay when the unit returns to idle from moving or starts doing anything else. Because the "Floats" box means that only the initial and death animations can be called, this end command never executes, and that is why the engine overlay continues to exist.
I think it's a really good concept how no unit has a main image overlay, all are treated equally and the same animations are called on all of the image overlays. That's one piece of knowledge which I haven't showcased in any of the Doom mods yet so it seems that fact isn't that well known. However, when the same animations get called on all the image overlays, that's where things can get sticky.
For example, the shadow is just meant to be following the main graphic and nothing else, right? So when the unit begins to attack, we don't want to call the attack animation on the shadow, do we? There's no point. That's what the floats checkbox is for. Even though we want the attack animation to be called on one unit graphic image overlay, we don't want it to be called on the shadow. To stop that from happening, we untick "floats".
Thanks TERRAINFIGHTER, it all makes sense now. Perhaps a name for it could be "fully animated" or something? And in the description it could be explained that when ticked, all the animations will be called on the image (overlay), but when unticked, only the initial and death animations will be called. This is necessary because StarCraft tries to call the same animations on all the image (overlays) for a unit. Some of the image (overlays) such as shadows don't need to have anything other than their initial and death animations called, and so this box is left unticked for those image overlays.
I use the word image overlay instead of image because I think it leaves a better hint that all images are actually just overlays and that there's no main image. They're all overlays.
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Also, something else I noticed. Sprites.dat unknown 1 seems to only be checked for units and not for weapons. Could this have something to do with the fact that weapons cannot have iscript movement control?