Make sure you have all of those installed. NOTE: You may also want to visit here for a variety of good models.
Export the model via File -> Export -> 3D Model and make sure it's a COLLADA file. Don't fret too much about the model if it is off center ect. However it is best to remove decorative lines that do not add to the actual shape.
Open up Mesh lab and import the model via File -> Import Mesh. Don't be alarmed if it seems to freeze or hang, the conversion is rather high quality and takes it's sweet time.
Clean up the mesh using Filters -> Cleaning and Repairing. What you actually use is up to you, just remember if you screw up to use the reload button at the start to start over. It may also benefit you to use Filters -> Normals ect -> Per Vertex Normal Function, this will ensure all the faces face the right way, although I'm not sure if it's necessary as the faces become double sided.. Lastly it is best to use Filters -> Texture -> Convert PerWedge UV into PerVertex UV, as SpaceEngine doesn't seems to like wedges too much.
Export via File -> Export Mesh As... . Name your model appropriately and set the type to be Alias Wavefront Object (.obj). Click Save and next will appear a set of options. Make sure ONLY to select TexCoord under Vert, anything else will crash SpaceEngine. And of course click OK.
Now for the messy part. Open Blender and remove the clutter in the scene by right-clicking and pressing the delete key. There are three delete-ables, delete them all.
Once you're sure you've done that, go to File -> Import -> Wavefront (.obj). A menu should appear, simply navigate to your file and double click. Prepare for lag.
Now if all goes well you should see little to nothing extra. That's good. Press the A key to select the mesh and press S and drag towards the centre. This will shrink your previously enormous ship to a workable size. Don't be worried about the size, it is really for our benefit as SpaceEngine appropriately re-scales objects in game.
Here's the fun part (not). Press Shift Crtl Alt C, this will give you a set of options, press Geometry to origin. This will center your ship. If you want the ship to be slightly displaced front centre, simply click any of the handles on the white-circle-thing to drag it in a direction.
Now it may not appear so, but if this model were to be used in-game it would appear as a ship shaped "hole" in space. Nicht Gut. At the left of your UI should be a little circle with orange and black colours. Click it, this will show a little menu for materials. Just click the little plus button and that should fix the bug.
Now go to File -> Export -> Wavefront (.obj) file and make sure to only tick "Include Edges, Include Normals, Include UVs". Anything else should remain un-ticked. Click Export OBJ and voilà! You have a (hopefully) working model.
Well that should be all, leave any comments for improvement or thanks below. This was my first attempt at a tutorial so expect absolute failure and hope for awesome.