For CRYENGINE 3.7.0 we changed the NormalMaps file format to BC5S (signed). Your existing compiled *.dds files will not work correctly as the format will be the previous 3Dc format.
The RC (Resource Compiler) will need to regenerate them again to the new, correct format.
To do this:
<root>\GameSDK
).This will take some time depending on the amount and type of texture content you have, as well as available processing power.
As with every update, make sure to use the correct matching RC version for the build, and remember to update your plugins and use the Settings Manager to point CRYENGINE to the correct build.