Ok, various issues here to work through...
It does seem like there is a problem loading .JPG's, I guess I must have not enabled JPG support when I built Qt. But as long as other formats work I won't worry about this too much for the time being.
The error message when the converter finishes is a known problem which I also get on my machine. Actually the eror comes from PolyVox - somewhere the memory is not being deleted properly. I will look into this but at least it makes the volume

For the missing textures see my other post:
viewtopic.php?f=2&t=25You say the cannon is not visible - that is strange. Are you sure it's not just underground? Can you see it with the original terrain? If not, how were you able to fire shells?
The height of the water can be adjusted but the water is not actually part of the volume (it's just a mesh). If you open 'share\thermite\Ogre\maps' you will find 'load_me.map' This is the XML file which is loaded when you run the engine. You can change the volume which is loaded in here, and you can also move the water:
Code:
<node name="Water">
<scale x="126" y="126" z="1" />
<position x="127.5" y="20" z="127.5" />
<rotation qw="0.707" qx="-0.707" qy="0" qz="0"/>
<entity meshFile="water.mesh" name="WaterMesh" castShadows="True" collisionShape="exact" mass="0.0"/>
</node>
Try changing y="20" to a bigger number.
I believe the 'bubbles' problem is because the cannon is actually underground. So as soon as you fire the cannon the shell explodes. Also the camera is 'inside' the ground which doesn't make sense... try placing the camera inside a bubble and firing some more. You might see what I mean...
Unfortunatly there is currently no way to change the position of the cannon. Eventually it will be controlled by the XML file, but not yet...