There was an early C compiler for the Model 1 system, but the linker didn't work so the decision was made by Virtuality to write the entire game in V60 assembler. At that time only 2 software engineers at the company (myself and Stephen Northcott) had written games in assembler so we were put on the project and lived in Tokyo for a year to complete NetMerc at Sega's HQ.
As R.Belmont points out, almost all games of that era (8-bit, 16-bit, arcade) were written in assembler, so it would have been unusual to write it in a "high-level" language like C.
As for the graphics, because NetMerc was a flat-shaded-polygon 3D VR game, they were mathmatically generated in realtime by the on-board graphics DSPs. The 3D models themselves were created in Softimage on Silicon Graphics Indigo2 workstations by 2 Virtuality artists.
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