Not sure why Max did that to your model, but I think I know how you can solve this.
You'll need to edit the Surface Properties of the model mesh, the left side of the body. As that is the one being blocky.
So select the torso part, on the right side you should see, the stack with Skin and Editable Mesh under it. ( I don't have Skin in my screenshot as I just used a silly Cylinder.)
Click on the Editable Mesh, Max will throw a warning message at you, don't worry just hit yes.
Then, you'll get to the options avaible for the mesh:
http://i129.photobucket.com/albums/p214/Quanon/SMOOTH.jpg)
What you need to do:
1) Scroll down to the Surface Properties part of the mesh: you'll see that box with the numbers(smoothing groups). Its these numbers that tell Max how much to smooth the model. The higher the more. In my example of a cylinder its just a low 4.
2) First, use select poly ( the squarre icon at the top), just click on any poly that looks smooth. Scroll down and you should see what number is picked to make it look that smooth.
3) Knowing the number, go back to the "ruff" side, select the whole bunch of polys that make up the left side of the model, and click the number to smooth. You'll have to repeat this for the arm and leg part aswell.
This should help out a bit; though you might to re-check the smooth parts. Often the arms and legs might have a differant number then the belly for example.
Hope this helps a bit :)