I repeat this what has already been sayd with some extra info.
Make sure that..
picture is 513x513
picture is greyscale AND indicated
on greyscale set the color depth on 8bit
no transparency
save as png
Easiest way: open watermill terrain, open your own terrain, drag over your terrain and put it over watermill, save it under a new name and that should work.
Map making has absolutely nothing to do with an Account by the way.........