Issue or some misplaced settings?
Does it look like that ingame?
If not, probably nothing to worry about.
Its just the Default Source texture reflection, and its trying to be applied to a surface without a proper hammer normal-map, this is just a hammer bug, and it should look normal ingame.
In short, its perfectly fine.
I was gonna say, I’m pretty sure that’s fine. Mine’s been the exact same way forever.