http://forum.drdteam.org/viewtopic.php?t=672
I have pictures of it.
Torch not emitting light:

Torch emitting light:

It seems that it is related to a setting...
Options > Display Options > OpenGL Options > Sector Light Mode
By default, EVERY game that is loaded get the setting of "Doom". I think this is part of the "bug".
When the torch or candle is using the "Doom" sector light mode, it doesn't get lit up, as seen in the pics. It looks normal when the sector light mode setting is "Normal".
My suggestion/request: Any non-Doom game by default should have the sector light mode setting at "Normal".
Candle not emitting light (Sector Light Mode: Doom):

Candle emitting light (Sector Light Mode: Normal):

Edit: This not an ATI bug, I checked it on my NVidia board as well.