When you're creating the heightmap, make sure that you're not just using grey colors, but that you're actually using the Grayscale setting. I would recommend using a program such as GIMP, as I don't recall if MS paint allows you to format in the way that works best for a heightmap. With some programs such as Paintool SAI, you have to convert the image to Grayscale using GIMP, so you may have to do converting if you don't wish to create the heightmap image using GIMP's tools.
Make sure you have the Alpha Channel lock OFF and be sure to flatten all layers. c: