STEP THE FIRST:
Have a working copy of Milkshape 3D. Any version.
STEP THE SECOND:
Open up Milkshape and then the model you want to cel shade. I'll be doing this tutorial using Hunter (a Quake 3 character model), because she has big boobies.
STEP THE THIRD:
Now that you have your model, it's time to do a little maitenance. First off, make sure your model is all ONE GROUP. Click on the "Groups" tab in the left menu. You should only see one item under the list. Below, you see that I have more than one group (head, torso, legs).
We don't want this. Select all the groups (shown) and then click the nice REGROUP button. All the groups will be combined into one. Don't worry about the name.
If you're wondering why we want it all one object, that's because 3dmm likes its models simple. One object, one texture. Plus, it makes the cel outline look much cleaner.
STEP THE FOURTH:
So, now we have a model that's just one object. Now you have to make a choice! Do you want your model colours SOLID (like Taco's spheres) or TEXTURED? No matter which one you choose, you still need to make a texture. No matter what you make, ensure that the texture has a SOLID BLACK area on it. Kind of like this:
You need that for the outline. Don't make the black too big, nor too small. You need to be able to map a fair amount of polygons to it. I'm going to use the SOLID idea for this example. There's no real difference between the two styles, except one little snag. I'll talk about that in the next step. Right now, finalize your texture. HERE'S MINE!:
You'd best save it as a BMP for now. We'll worry about the palette later (actually, we won't; that's your problem).
STEP THE FIFTH:
So why the fuck does if we texture with solid colours or a detail texture matter? Only for one reason. Look at my model. Look at her hips. THEY SUCK. Messy polygons. When you texture with detail, that mess will be noticable. If you texture with solid, you can cheat around it. Since everything is solid, nobody will see the mess. I recommend cleaning up your model anyways, it's just proper. But hey, I know people are lazy. Also, you don't have to worry very much about mapping with solid colours.
SO ANYWAYS. Texture the shit out of that model. If you don't know how... well... FINE I'll tell you. But no images.
Click on the Materials tab on the left menu.
Then click the NEW button near the bottom.
Then click on the top <NONE> button and a browser window will pop-up. Find your texture and select it.
Now, select your model. Then, click the ASIGN button. (you will have to go back to the Select tab, then to the Materials tab).
Now, with your model still selected, hit CTRL+T.
The Texture Mapper will pop-up.
In this, you get to move a wireframe version of your model around overtop of the texture. What you see is what you get (the texture will apply to the model exactly as shown).
Yeah, you figure it out from there. This is a cel-shading tutorial not a Milkshape tutorial.
SO NOW we have a textured model! If you don't see any texture, right click on your viewports and click TEXTURED (making it checked).
She's UGLY! See all that shading and lighting and shit? Yeah, don't worry about it. That's Milkshape being a penis. It'll be solid come 3dmm.
STEP THE SIXTH:
Time to make this babe cel-shaded. Select the entire model. Now, hit CTRL+D. Your model will DUPLICATE. OH SHIT. Now, without deselecting or selecting anything on your model, goto Tools > FatBoy. In the pop-up box, enter a number (this will be the thickness of the outline). 1 or 2 is usually enough. 1 is thin, while 2 is medium. 3 is a bit big, but sometimes you wan't that I guess. Have both checkboxes checked.
Click OK and your model will get FAT. OH SHIT. Don't select/deselect anything. Hey wait a minute... where'd our texture go? Yeah, sometimes Milkshape is a penis and removes your texture. Simply go back to the Material tab and re-browse for the texture (not make a new material, it still exists, Milkshape just erased the texture your browsed for). It'll apply itself.
STEP THE SEVENTH:
Again, don't select/deselect anything. Goto Face > Reverse Vertex Order (or hit CTRL+SHIFT+F). Your model will go INSIDE OUT. If nothing appears to change, right click on a viewport and choose DRAW BACKFACES (making it unchecked). Do this to all four viewports. Now you can see that your model was inverted.
Still don't deselect/select anything. And yes, I realize it's not textured, that's just because I forgot to correct it after doing the FATBOT step. You should see textures though.
STEP THE EIGHTH:
Time to make that inverted model into a solid black outline. Still don't deselect/select anything. Bring up the texture mapper (CTRL+T) and map your model to the BLACKNESS of your texture. WAIT. Don't see any polygons on the mapper? Go to the dropdown box on the mapper window and choose the Duplicate. There ya go.
Remapped and sexy (kinda).
STEP THE NINETH:
We have two groups now... we only want one. You know what to do. You can deselect/select things now.
Upon regrouption, your textures should not move. If they do... you broke it.
STEP THE FINAL:
AAAHH!! CEL SHADED MODEL!
To make it even more clear, just for viewing purposes, you can manipulate Milkshape into displaying the texture without lighting. To do this, goto the Material tab and click on DIFFUSIVE. Change it to pure white. Then click on SPECULAR. Change it to pure white. Then click on EMMISIVE. Change it to pure white. It should have no shading now.
I redid my texture so that everything else was pure white, and now you can more clearly see the fucked up outline.
The more detail the model, the uglier it gets. Actually, it really likes rounded things. Anyways, you have to manually edit this shit out (if you want, and if there's a problem). You can also expirement with selecting only certain parts of your model when applying the FATBOY tool to it, to clean it up. I'll leave this to you to play with.
Now you have a basic knowledge. Export to MD2 and import to 3dmm. Enjoy. No I'm not going to tell you how to get it into 3dmm.