i'm sorry if this sounds like i'm just promoting my own engine, but it does sound like you could use it. anyway, it's called the DefyEngine and is available at http://members.xoom.com/mutex0 complete with source.

i'm not sure but i think d3d supports hardware transform/lighting.

I don't quite get it, is that engine 2D or true 3D?

this is probably the 20th time someone asks this, but I haven't found any good answers on this... my question is, me & 20 others wanna create an overhead or isometric game 3d RPG, now, what's the best engine to use (it will be freeware) ? the best one I have found is fly3d, but I am not sure...
best would be either d3d/ogl, support for h/W T&L (we are gonna do a highpoly game for geforces and the likes)
and suited to the overhead perspective, and include support for dinput and dsound, not only gfx...
any suggestions or links to comparisons?

objects have an X,Y,Z coordinate, while floors only have X,Y, so i guess half 2d/half 3d. it was not designed to do Quake or Quake II type stuff however, more like Diablo