[quote="Ashley":s5lv6uqy]Draw Carey is right, there's a world size limit in the Physics behaviour which is about 4000x4000. Tweaking the World X Scale and World Y Scale parameters might help... but I think soon Physics needs a make-over, maybe with one of the new 2D physics engines...[/quote:s5lv6uqy]
Perhaps it may be a good idea to contact the guys that make PHUN, the 2d physics based drawing program (which is freeware). I don't know if it's open source, or if they will even be willing to share, but the collision is pretty good, and they even have 2d fluid dynamics.
You can find the PHUN website here:http://www.phun.at/