At some point a new thread in the "shared code" section should be made about this converter. Though I see there's a bit more activity on segaxtreme than there is here.
Regardless, how do you export your OBJs? I can use the model converter on your Sonic file errorless, even changing the textures (with new ones), and it converts and displays properly.
If I use my own model, it converts fine (no errors) but it does not display. I ask about how you export your OBJs (or handle the models?) because I can import your OBJ file into Blender and then re-export it, at which point if I use the model converter on it again (using either my settings or Blender default), it does not display. Using my demo or yours, and your demo polycount correctly reports with the non-displayed models that there's no polygons happening.
The textures DO load, to the best of my knowledge, as the converter gives information about them (size 8x1, depth around 2800, RLE 2) and states they are written into the file and your demo pauses and states loading textures from that. Must be about my OBJ file.
I'm using Blender 2.78a.
/e: One last thing. Any chance of loading the binary files from a BIN folder on the CD? Just to keep things neat. At present it seems they can't be anywhere but the root dir.