Heads from Skyrim.

It's interesting how quickly retopology is done there with Reduce, judging by the look of it. Moreover, for a quick, one-click option, it looks very, very good. I was going to ask if the Skyrim models are too heavy for Heroes, but I see that you're simplifying them, and that's the right approach. And doesn't Smooth add polygons? I mean, is it just smoothing groups, or does it multiply the polygons? Because if it multiplies, then it's a pointless situation: you multiply first, then divide. If you reduce it directly without multiplying, then you should get a cleaner result. Regarding the squares on the first model: it's just that the smoothing groups aren't configured. They can be fixed in Max with one click. This is in my guide on transferring models from Heroes 7. Or maybe Smooth does the same thing here. I can't visually determine whether it's polygons or just smoothing.

Added 2 minutes later
True, the shadows on the reduced model look a bit rough. I know how to fix this in Max; you need to use the Edit Normal modifier, select all the normals, then break them apart and join them again. The shadows should look smoother after that.