I have created a simple stone texture .mxm with MX studio using a simple diffuse jpeg and a b/w jpeg for the displacement map. The material works beautifully in the MX studio preview scene so I export the MXM for use in my models. When I try to apply the texture in sketchup (or even in maxwell studio), It renders the object with a deformed shape as if the displacement is not working correctly. Its almost as if the UV coordinates for the displacement have gone way out whack. Any suggestions? When I open up a professionaly created texture by Arroway, for example, in the editor it has basically the exact same setup.
When it comes to displacement, I will need to see some example files in order to tell you what is happening. Please send a SKP (the simpler the better), the MXM you are using, the referenced texture files, and also probably an MXS exported from the SKP and then set up in Studio, so I can see exactly what you're doing.
Thanks for sending the files. I would recommend first reading through the displacement docs; the main points to note would be related to adding mesh resolution, as demonstrated here, and possibly using a higher-quality displacement map.

That said, here is an example using the model & MXM as you sent them, but with the Adaptive Subdivision mode disabled, Subdivision=1000, Smoothing disabled, and Height=10% (and using physical sky & sun to better see the effect):
  • Image
As you can see, we are running out of resolution in these textures. I would recommend getting better textures (as noted in the docs, it is better to have a 16- or 32-bit displacement map, so that there are more greyscale levels available), separating the mesh to be displaced into its own group, to give better control and ensure that the minimum amount of geometry is displaced, creating it with more resolution as described in the link above, and trying to use Pretesselated displacement instead of On the Fly, to reduce render times. When using pretesselated displacement, start with a low subdivision value and work your way up, since it can use a great deal of memory.
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