Half Life: Source isn't using Source's graphics because... VALVe (and yes, it's VALVe. check at their games' intros) didn't upgraded the graphics to Half Life 2's graphics, but they have change the interface to the Source engine (menus, console commands and etc...) and added a LITTLE physical improvments, and that's it. too bad they didn't upgraded the graphics too, but the gameplay is still good enough and challanging enough to kinda ignore it.