I may be able to help. :3
A few quick questions first, If I may.:
What is the exact name of your HeightMap file?
What type of file did you save it as? (Jpeg, Png?)
I also believe the dimensions should be 512x512, but I may be wrong. If you want, go into your maps file and open up the Water Mill height map in Gimp, and copy and paste your map overtop of it, so you have the correct size. Also, make sure you're saving the file in the correct folder.
FeralHeart>>Media>>Terrains
Hopefully this helps, I may have some further options if none of these help. ^^