Yup they are ugly. The lights are from the particles. I'd suggest doing a find all in the particle directory for the word "light" and you'll find all the particles that use a light. There are alot. The particles will spawn a deferred light if bSpawnLight = 1. There are 5 other properties for lights: light_color, light_falloff, light_intensity, light_minTime, light_scale.
You'll be wanting to primarily change the light_falloff value here. values from 0.0 (No falloff. circle of light. Not what you want) to 1.0 (so soft the light falls out right away and doesn't effect anything). A value of 0.5 is usually what you want. And I'm noticing most of the values are set to 0.25 or lower, so there's the problem right there.
You can't change the flashlight unless you script your own flashlight actor that spawns a particle that spawns a light on the player(s) and follows them.
And there's many more sound issues. I fixed some of them for the coop mod. Example of one: 1 of the death animations for the raptoids play water splash sounds when they fall on surfaces of type "default".