I did it!
I imported the mesh with the rig binded to it and it didn't crash (well after I did one thing, I'll tell you later in this post what it was) but the monster was huge lol.
Okay firstly, what I did was I deleted all the bunch of groups that you had which weren't even part of the model, then I ungrouped each polygroup that WAS part of the model, selected them all and grouped them all in 1 single group. Next thing was to set linear working units in window/settings 'n preferences/preferences/settings and changed them to meters instead of centimeters like you had otherwise the monster will be huge (and you can't scale down monsters in HPL2). After I changed the units to meters the monster became too small so I scaled him up to 10 and then freezed the transformations (important!).
Now the rig that you made will become too small after that so you will have to make a new one and I think you'll need to make a bone for the sword too to be able to move it while animating but if you make the sword seperate from the rest of the group you might not need to do that but I'm not sure if that will work, it's up to you to try that.
Now once you binded the skin with your finished rig click "export all" and import it in the model viewer (not the mdoel editor). When you will import it it will crash, BUT go to the directory of the monster and delete the .MSH file! Apparently the first time you import it doesn't find a material file so it makes the .MAT file for you along with the .MSH file that makes it crash, and the second time you will open it fill find the material file but it will use the bad .MSH file so just delete that .MSH file and keep the .MAT file. After that it shouldn't crash when you try to import it again and you're good to start animating
Here's the pyramidHead03 file that I modified by making the model 1 group and the mesh is the right size with right working units-
http://www.mediafire.com/download/fc50oq...dHead03.mb
Hope I explained this well and if you have more questions about this or anything monster making or animating related feel free to ask!