MrMidi is 110% right in that if you are not used to working in a graphics program you should first learn to create things in the TE. Graphics program can be very tricky.
As RamPytho found out the elevation bmp maps heights to colors. Basically you have 256 shades of black and white. Absolute black is sea level. Absolute white is the highest point in your elevation map. In between these you have 254 varying shades going from absolute white to absolute black.
On top of this depending on what you set your max elevation at each jump in color represents a different shift in feet.
Say you max elevation is 20,000 feet. Divide that by 255 and you will see that each color shift is 78.431 ft. So sea level (black or rgb 0,0,0) is 0 ft while the next rgb color of 1,1,1, is 78.431 and 2,2,2 is 156.862 and so on up to absolute white (rgb 255,255,255) which would be 20,000 ft.
Now if you have a different max elevation set. Say 11,000 ft then you divide that by 255 and see that every of the color shift changes is actually 43.137 ft.
This is good to know and advance stuff but I can not stress how right MrMidi is to say that this can get very, very tricky. Setting gndtype (terrain tiles via a graphic) can even be trickier since different colors tell what terrain to use or what terrain to blend with another terrain.
So follow what MrMidi is doing for now and he will work up to the advance stuff but believe me the advance stuff can get very very frustrating at times. Like when you have worked on a gndtype file for a long bit and then realized you color was just off by 1 value and that is why things weren't working out.