"I had two other issues with Unreal levels and S3TC textures. I had two other issues with Unreal levels and S3TC textures. Some parts of the sky is black..."
SkyBox.utx, City.utx, and ShaneSky.utx are not masked properly and screw up the sky. Replace the S3TC textures with the original ones.
"I can't change the brightness."
In the settings, find GammaOffset=0.000000 and enter positive values to brighten and negative values to darken.
"The deemer overlaps the HUD."
In the settings, find ZRangeHack= and set it to true.
"Those aretifacts are showing up on my HUD too, if anyone got a soultion, PLEASE let me know."
Those "aretifacts" happen because of the antialiasing. If it is set to higher than 2, then they appear. The solution is to either set antialiasing to 2, turn it off completely, or just get used to it. (I got used to it. It isn't that annoying and it only happens in the menu. Just don't set antialiasing to 8 or it is extremely visible.)
Hope this helps.
P.S. It isn't hard to find out what the settings do. Most of the settings are documented at
http://cwdohnal.home.mindspring.com/utglr/ and
http://www.oldunreal.com/
Edit: Update #15! Added some more stuff to the S3TC Textures section.