Few problems, textures, sounds and PVS

Bought the indie license yesterday and I compiled the plain vanilla 1.3 engine and ran the FPS demo. When a look at one of the healthkits close up its fine, but when I back away the texture just goes red. Why is this? is this a bug?

I'm also experiencing the crossbow sound problem (shooting sound becoming explosion).

Also I've noticed no matter how many items are in my POV, the number of ghosts on the client is 23, is this becasue I'm running the combined server/client, or do I need to implement a filtering routine?

Thanks,

Rob.