Quote: "3dGameStudio's Model Editor saves in .mdl format but uses bones for animation."
As of not all that long ago I'm sure. This was back when I was looking for a new engine and Game studio didn't support bones, so if it does now then cool for them for finally coming up to speed.
Quote: "what kind of a program can I use textract it to seperate .smd files?"
Milkshape3d. It's a modeler, animator , uvmapper, importer and exporter for a fairly inexpensive price last time I checked.
Don't just say No it can't be done. Think outside the box.