Unless this is a new discovered bug in the game, it all should be the heightmap itself if we were going to think the simple way.
These walls, go up on one side aye?
I'm just thinking that the brush or whatever you used when making it didn't get the last pixels on the side of the image, just making a wall there. Maybe use a zoomy zoomy tool and look if there's any bright corners. If there isn't any, they heightmap picture is the same pixel size on both width and height yar?
I've never bumped into this myself.
If you keep having problems, simply create a new map, import the watermill heightmap to that new map.
If the new map get these same walls as you're having now, even though you imported the watermill one without changing anything, it's the game.
If you import the watermill heightmap to a new map, and the wall is gone, it's most likely something you did when making them.