I actually manged to fix the problems that plagued bojote's sm3 in fsx by making a hybrid of default fsx shaders with his files. Most of the shaders are sm3, the others are left at sm2 (full sm2, not a mix of sm2 and sm1.1) such as the general shader, terrain20 shader and the water shaders (for compatibility with fswc and rex).

-Fixed the sun bleeding through solid objects
-Fixed the water issue (you can use fswc now)
-Fixed the issue with white objects such as trees and buildings in fog
-Fixed the issue with wave animations showing through think layers of clouds and trees
-Fixed world covered in white in top-down view