Okay, I've imported my lowres unit and need to envelope the unit to the bones. I clearly made a mistake in enveloping because when I test in game the legs don't move properly (I think the knees are stuck) even though I did select those bones when enveloping.

Why don't you use the hight res, enveloped unit and select poly reduction in the modify menu. You can reduce the polygons as much as younlike, but you won't loose the envelope. Mostly that worked for me.

Because I'm making a unit for SWBF1, and it doesn't have as much memory for unit models, it seems.

EDIT: I figured it out. You have to manually weight each part of the mesh to their appropriate bones, otherwise you get the 'spazzing out' as there aren't as many points as a higher-poly model.