Is there a polygon limit?
When importing an object like a castle from 3d studio max is there a polygon limit? Can you basically create your whole structure as one piece or do you have to create individual parts and splice them together? I know a castle is an extreme example but...
Trouche, I'm certainly not an expert on the modeler, the level editor, or 3DS MAX, but I may be able to answer your questions.
There probably is an upper limit to the number of polys you can import into the modeler and therefore include in your level databases. However, you are unlikely to ever run into any such coded limits since your system performance will slow to a molasses-like drip long before.
After reading your question, I downloaded a 12,398 poly mesh of a raging bull (from 3dcafe.com) and tried to import it into the modeler. It came in perfectly and exported to REO format without a hitch. It even imported into the Level Editor without any problems. However, everything was SLOW. In playtesting this level, framerates slowed to a crawl whenever part of the bull was in the viewport. The only other objects in the level were a Rynn object, a funky-looking mining slave and a 512 polygon tower I've been working on. So, as long as you don't mind the speed hit, there should be no problem with including high-res meshes.
If you want to see a screenshot of all of it together, go to http://members.xoom.com/aaronsellis
As for your other question (about the castle), yes you can import everything as one big mesh, but I wouldn't suggest it. I tried something similar with my tower object, with less-than-satisfactory results. Sure, it worked ok as a model, however, the bounding boxes and spheres caused problems.
When working with my tower, as long as I used a bounding box that completely surrounded the tower object, then my tower was a refuge from missile attacks from outside. That was what I wanted. However, the bounding region also prevented orcs from following me into the tower. I didn't want that. Also, one of the annoying side-effects of large bounding areas is that the viewport perspective changes while the Rynn object is inside of the bounding region.
For these reasons, my suggestion would be to create the sections of your castle in MAX, bring them into the Surreal Modeler, then export them from the Modeler (still in sections) and then assemble them back together in the Level Editor. Doing this will ensure that your bounding areas fit snugly to each section mesh, avoiding the problems described above. There is probably a better way to do it than this. Perhaps I'm not using the bounding tools properly in the Modeler. Anyway, this is how I am approaching a similar project.
Sorry this was so long. I hope this helps.