First of all you should use smoothing groups on your mesh and also take this into account when baking the normal map.
Blender normal maps have the green channel inverted. You can either fix this in an image editing program like photoshop/gimp or in the material editor by multiplying your normal map sampler by a Canstant3Vector (1,-1,1).
Besides there is a UV seam across your mesh that causes normal map errors because the high and low poly model don't match exactly. You should also fix that in PS/gimp.
Also, did you possibly mirror the right side to the left while modeling by duplicating it and scaling it to -1 in the corresponding axis? If so, your normals may be reversed on the left side. Though if this material isn't two sided then we'd be able to see through the left side to the back of the mesh.
I'm not using any texture compression that I'm aware of. I did use a mirror modifier when building the low poly (The high poly was done in sculptris with a mirror) but I applied it and recalculated the normals before baking. I've tried a few different methods of UV unwrapping, including letting Blender do it automatically, but I still get a similar problem. I'm going to try exporting in a couple different formats then converting using the autodesk fbx converter and see if that helps.
Thanks for the tip on the green channel. I tried multiplying it by (1, -1, 1) but it didn't help.
I think I have it now. I ended up recalculating the normals using xnormal, but I was still having the problem. For some reason the nmap looks correct in the content browser, but when it is imported into the material editor the green channel is obviously inverted. Thanks for the help.