The normals on the arms in this game:
Are messed up - I tried recalculating and everything but I can’t seem to get it to work.
Press (Numpad) 0 to go into camera view,
Then get into textured view,
Then press P. W to walk forward, and mouse to look around.
EDIT: It seems that the arm models are on the second layer. Just move them to the first to see them.