If there isn't a setting available for it. However, if you are doing a full conversion you can use a custom resources file to override where the game looks for the "shaders" directory, and hence override "game_object_flash_frag.glsl" - which is responsible for the glowing effect on an object (Note that an object will still get the blue-outline when moused over as that is a different effect). You can just replace it with something like:
////////////////////////////////////////////////////////
// Object flash - Fragment Shader
//
// Makes a nice flash effect around objects.
////////////////////////////////////////////////////////
#version 120
varying vec3 gvNormal;
uniform sampler2D aDiffuse;
@define sampler_aDiffuse 0
uniform float afColorMul;
void main()
{
gl_FragColor = texture2D(aDiffuse, gl_TexCoord[0].xy) * 0;
}
In other words:
1) Make a custom resources.cfg
2) Make a copy of the shaders directory - put it in your full conversion's folder
3) Remove the existing shaders info from resources.cfg - make it point to your new folder
4) Edit the files to suit
This will remove the highlighting on the object, but not the rim-light when you mouse over it.