I am just posting this because SOO many people say "guess whether the prop is compatible with physics or dynamic" etc. BUT you don't need to guess!
In the model browser, find a model you want, when you have it selected, click the info tab. There will be checkboxes telling you what type of entity the model is compatible with, Dynamic, Physics and Static.
Enjoy not having to guess!
Refer to Screenshot A
This model is compatible with the Dynamic prop type but no others.
For a little bit of extra information, if you want to give a model a Dynamic or Physics property when it isn't compatible, use "prop_dynamic_override" and "prop_physics_override" respectively.