Nah, I'm not talking about no "shadows" at all, Im just saying that if you do the tangents wrong your ship will have dark areas where there shouldn't be any dark areas. That said, Sins engine has a very rudimentary light/shadow system (I suppose real shadows would bog down the system too much, so its pointless to go for anything higher than "ok, this side of the ship is slightly darker than the other side" - you will notice that the "dark side" of the ship doesn't really exist - as soon as the camera is perpendicular to the dark side the ship is lighted up, even though theoretically it should be pitch black. This is of course for gameplay reasons.
The method I am using is pretty much the one suggested in the modding manual, and it replicates the lighting of vanilla ships pretty well. The ligh/dark transition occurs smoothly as well, though the effect is not as obvious as it would have been if the engine did real self-shadowing.

However, if you do not adjust the tangents well, which shows in XSI as sharp color transitions across polygon lines, you get artefacts like this:

I will have to adjust the tangents in this section to get rid of that. Notice its not actually a texture problem, rather its a lighting problem, where the bumpmapping suddenly shifts the angle and this shows up as a pretty obvious and ugly seam. That's why I recommend not going over 60 in XSI tangent smoothing operator, because excessive smoothing seems to "mask" up what would otherwise be pretty obvious sharp color transitions.