If you're using UnrealEd that comes with Gears of War, I would have to say ditch it. UnrealEd that comes with Unreal Tournament 3 works rather well in XP and Vista. I would suggest, if you are using UnrealEd/UT3, updating your GPU drivers and ensure you aren't forcing tripple buffering with nHancer or other driver tweaks,…
You should make assets in your 3d application and then export them to Unreal (Things like rocks,buildings, trees ,plants) . There is no way to model assets inside of unreal. You can however sculpt the landscape inside of unreal, it has a tool set that allows you to push and pull the terrain to the shape you want. You can…