does anyone know if there a python script or other way to make a live animated shadow in the GE
You probably mean stencil shadows. Unfortunately Blender Game Engine does not have stencil shadows so that can not be helped. One thing is that someone who knows to program shaders in blender could try to implement a soft shadow shader for blender. Another way is to make sprites that cycle with animations, but those work only with flat ground since they are just flat sprites. And if you have lights that change their positions real time this methoid will look a bit funny.
So currently we just have to wait and see if blender game engine developers would implement stencil shadows to the engine…
I’ve just seen that, maybe it is what you want:
http://www.blender3d.org/forum/viewtopic.php?t=8124&sid=0f35fc0222f89fea463cae890cd3b492