Noticed this has been happening for a while but not got a clue how to cure the problem, also image2 shows what graphic settings i am running

I think that's just how the track/lighting are done in LFS at the moment, or possibly a throwback to S1 methods.

I've seen that a lot in some of the SO tracks.

It's not the lighting, it is the race groove that is drawn on the track and it catches the edge of high objects and is drawn in the air.

You can delete the *.trs files in the data/knw folder It will have to redraw the track groove/path all over again, but thats not so bad.