It's just weird. When I look on youtube for 3ds max modeling I almost can't find anything. I can find a bunch of car models, but no characters. But if I search for Zbrush character models I get a ton of hits
That's because Zbrush has taken off as an industry standard since it allows a faster workflow. Detail sculpting in the poly-modeling tools like 3dsMax is more tedious than the intuitive, sculpture-based process in Zbrush. Since keeping up with current technology and next-gen graphics requires everything to be highly detailed, everyone is going with a Zbrush-inclusive workflow.
You can check 3DTotal [link] for a whole mess of tutorials on software to include 3dsMax. Or you can try Blender [link] for free.
zbrush is just a tool they use. So you model the basic shape in 3dsmax and then use zbrush to paint in the tiny details at an extremely high detail level. Then, because high-detail levels take literally forever to render and work with, they 'bake' those details into simpler images that the renderer can use.
So for instance, they can make a rough model of a hand in 3dsmax. Then use zbrush to "sculpt" the details like the creases, scars, and textures. They then take those super-tiny details and make them an image so that 3dsmax can render the details. 3dsmax is used to render out the animation using those details in combination with the model.
Also, game companies almost all use their own, custom software. Even if they say "3dsmax" they really mean that they started with the 3dsmax engine and have modified the living fuck out of it.
Just wanted to make a distinction: 3dsmax is a content creation tool where games are concerned, not an engine. It just spits out data files that include the animation frames (usually keyframed skeletal information) and geometry information. While you can create and render animations in 3dsmax out to a watchable video, that's a different output than data used for real-time rendering in a game. The only "modding" happening to 3dsmax might be custom scripts for exporting (or adding) data to a filetype (custom materials, rendering information, custom rigging, etc).
I never actually said 3dsmax was a game engine. It is, however, integrated with cryengine and there are a few real-time renders for 3dsmax. You could run it as a game engine if you felt inclined to do that. I will point out that 3dsmax actually runs a game engine internally to preview materials and viewports. It also uses game technology in the Quicksilver rendering. You could, if you wanted to, make an entire playable game in 3dsmax.
The animations used in game engines are animated in 3dsmax before they are exported to the engine. I'm not aware of a major, modern game engine that doesn't have support for 3dsmax animations. If you think that it's a different form of data, then you're also incorrect about that. You certainly could run 3dsmax animations in real-time if you had the computational power. In fact, you can run them in real-time in the viewport.
The SDK and API in 3dsmax is extensive and allows modding that goes far beyond exporting scripts. Large game companies almost invariably have custom toolsets that are programmed and maintained in-house. Many game companies just outright have their own software. I also know for a fact that a company can work with Autodesk to make source-code changes and can have the software recompiled when necessary. Obviously they don't do that for anyone, but that wasn't my claim. Point was: When a company says they used 3dsmax they don't mean they used the off-the-shelf version.
Finally, 3dsmax being a game engine has absolutely nothing to do with the OP's question and no one has even been talking about game engines here.
No patronizing necessary. I thought it to be a valid point to make. I brought up the word engine because you used it first in your last sentence ("modding the f***", etc). I was just trying to clarify for the OP that you can't make a game IN 3dsmax, which could have been misconstrued by your comment. As in you couldn't sit down, "mod" 3dsmax, and end up with a game. You create, animate, and export game assets with 3dsmax. (And relative to OP's question: that can then mean importing into Zbrush for detail work). If an engine can parse .3ds files (3dsmax native) into what the game needs, bonus. Other dev studios export to collada or entirely proprietary formats (where the modding/scripting might come into play).
There are a lot of 3D programs out there, but it's true that 3DS Max is used mainly in the gaming industry. Maya is generally a more cinematic tool (3DS Max and Maya are both owned by Autodesk). Zbrush is a tool that works in tandem with a base 3D program (usually) to enhance the textures and detail of the models. So basically, yes - the characters in Halo were likely modeled in 3DS Max, textured in Zbrush (or something similar like Mud Box), and then plugged into a gaming engine like Unity.