Yes it looks much better, I think the RS3 models also have a 'roughness' parameter which currently I do not use, in the future you could also use other specular model like Cook-Torrance, I once implemented it it looks really nice.
BTW the models actually use a specular mask, the specularTexture.w contains the mask. As you are using deferred rendering you could use an RGBA texture for the first RT and save the specular mask in the A channel for later use in the pixel shader. But everyhing wil not appear as shiny as they look in your pics, I was tempted to not use them but some objects don't look right without using the mask.
Seems everything in your code is right. When I was implementing lighting something like this happened to me. It occurred because when the camera is inside the light sphere it must be handled differently (but your code seem correct). Another issue I had was that I did not saturate the specular term then sometimes it went negative and it canceled the lighting term (but again your shader seems correct).
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I usually debug things the hard way, using shaders to test and dump everything I want to check as colors on the screen. Did you update the directx sdk? if you are using the directx libs that came with gunz I advise you to download the latest directx 9 sdk and replace the old libs and headers by the new ones. The NVIDIA nsight is more or less useful also.
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