For those of you who can't be bothered...
---WASD + MOUSE CONTROLS---
Save the following as MDK.CFG:
-----------------------
; MDK Configuration file automatically generated by MDK
cddata =
hddata =
hduse = 2
MouseWAxesMap = A0G
MouseWButtMapB = 2
MouseWButtMapC = 32
KeyUp = 17
KeyDown = 31
KeyJump = 57
KeySniper = 11
KeyLookUp = 47
KeyLookDown = 48
KeyZoomIn = 50
KeySideL = 30
KeySideR = 32
Brightness = 2
ForcePCorrect = TRUE
D3DOptions = -1073610647
---------------
This will change your controls to WASD + Mouse. The mouse looks left and right, and fires. Space is jump and right click activates sniper, use the wheel to zoom.
You will need to change Left and Right to A and D when on the re-entry stages avoiding the radar, as A and D are set as sidesteps and you can't sidestep whilst re-entering, just press F3 and remap the controls, then put them back when you're in the level.

You're a god. Thanks so much.
Brightness is too high for my liking though. ;)
Edit: I changed the settings around a bit...Item is now E, Item switching is 1/2, Turbo is Shift/Turbo Lock is Ctrl, Look up/down is R/F. I think that's all. :)
-------------------
; MDK Configuration file automatically generated by MDK
cddata =
hddata =
hduse = 2
MouseWAxesMap = A0G
MouseWButtMapB = 2
MouseWButtMapC = 32
KeyUp = 17
KeyDown = 31
KeyJump = 57
KeyFire = 56
KeySniper = 11
KeySturbo = 29
KeyLookUp = 19
KeyLookDown = 33
KeyZoomIn = 50
KeyItemNext = 2
KeyItemPrev = 3
KeyItemUse = 18
KeySideL = 30
KeySideR = 32
Brightness = 1
ForcePCorrect = TRUE
D3DOptions = -1073610643

Thanks a load. Not actually tried these yet, but just doing this makes you a legend (both of you!)
Cheers!

Works fantastic

Note...if you want better detail set D3DOptions to the following:

"D3DOptions = -2147352475"

These settings no longer work. They seem to be overridden.

Also all F3 does is bring up the load save.

Easy fix here. Use F12 to bring up the options menu instead. Set the keys using the normal configurator of the game. All you'll need to know is that in mouse setup you can actually turn on/off each axis sepertately so that you can still use x-axis to turn but not using y-axis to move (since you are already doing this using W,S).

I configured my keys this way:
mouse:
mouse x = turn
mouse y = off
mouse = zoom sniper
lbutton = fire
rbutton = sniper
mbutton = use item

keys
w = move forward
s = move back
a = strafe left
d = strafe right
space = jump
y = previous item
x = next item

just played a few levels and everything worked fine (same problem with the reentry scene of course but that's why you need to push F12.

An alternative method if you happen to have a controller handy, is to use a combination of WASD+Mouse and controller functionality to save you from having to keep redefining the keys before and after every skydive: Set up your WASD+Mouse and also map the axis of the left analogue stick of your controller to enable Forward, Back and Turn. That way, you get the benefit of analogue control for the skydiving sections and the nice WASD-with-mouse-turn for the main (on-foot) sections. The only real 'hardship' is having to pick up, then shortly after, put down said controller once these skydiving (re-entry) interludes end.

You can also do the opposite if you'd prefer to use a controller for the on-foot sections: Simply set the left stick for Forward, Back and Sidestep, and the right stick for turning, then set a few keys to your Forward, Back and Turn movements - to be used for the re-entry sections of the gameplay.

Note: In the Joystick setup screen, where the axis settings are located look for 'R' and set it to 'Off'. It represents the right analogue stick being pushed forward and back. Similar to what the poster above said regarding disabling the Mouse Y-Axis, you won't be needing this stick-axis because forward and backward movement is taken care of with the left stick, and as such you may as well disable it. You'll want to set the U-Axis to the sidestep command though, as this represents your right stick being tilted left and right. You might also need to set 'Joystick' to 'Enabled'.

Already did all that after editing the CFG did bupkis.

So you are saying that the actually implemented and for me working normal keybinding options don't work for you at all? Meaning if you reassign the keys in game the game won't accept them? That's strange.