Another mistake is to make a greyscale that is not the correct SIZE because you are making a smaller map (such as 128x128 miles) and try to import that. The best way to determine what's wrong with yours is to start up the TE, create a new terrain, add a few tiles and adjust the altitudes on them (preferably right at the center), save the terrain, exit, restart the TE, and then export the heightmap - and then compare the exported one to yours. The one you are trying to import needs to be the same format and size as the one that the TE exports or "bad things happen".
<S>
Guy