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This tutorial was written using a registered version of Terragen 0.9.43 however it can be completed using the free version. It is the first step in creating a Terragen Landscape.
You can find Terragen HERE.
Part 1 deals with creating a height map in Photoshop(or comparative graphical program) and importing it into Terragen.
It is assumed that to do this part of the tutorial that you have a basic knowledge of your graphical program.
Before you start you will need the Terragen Plugin Firmament. This is used in the importing of the height map.
As there is ample instruction on how to install the plugin it will not be covered in this tutorial.
Open a new document in Photoshop 257x257.
Fill the base layer Black.
Add a new layer.
Change your color to white.
Make a new layer and fill this with white.
Now choose your Polygonal Lasso Tool. Set the Feather to 7px.
Make a small loose selection in the middle of the screen that looks something like the image below after feathering.

Now Invert the selection and hit delete.
Deselect then save the image as a BMP file.
It should look something like this.

That's the easy part done with.
Assuming you have the Firmament plugin installed correctly, open Terragen.
Look in the main window for your landscape palette.

On here click the Accessories button.

This should bring up a list of options.

Choose the option highlighted above - Firmament BMP Import.
This will bring up an "Open File" dialogue box.
Hunt out your BMP file that we made earlier and double click it.
Now I have found that Firmament has the odd couple of bugs in it so you may have to do this a few times till it goes right.
On the odd occasion I have known Terragen to close unexpectedly when you click but when you restart the program you will find it will work after trying again.
The next screen you should see should look like this.

Once you see this screen click the button below.

Click OK on the next box to pop up (Scaling Choice Box).

Then OK for the final time. Terragen will now whirr for a little while importing your BMP and displaying it in the terrain preview.

Now for the last little things for this part of the tutorial.
Look over to the Rendering Control Palette.

First notice the Camera Options(We will be coming back to these in a later part).

Use your mouse to slide the Render Detail slider to the far right.

Now click the Render Preview button.

If you watch the preview window you will see Terragen build your landscape for you.
At any point you can click the Abort button or hit the ESC key which will stop the render from going any further. However Terragen may take a while to register this so with non-complicated renders it might be quicker to let it finish.

Your landscape should look something like this.

I know it doesn't look like much but following the next part of the tutorial will make it look a lot better as we will be changing the viewpoint and camera options.
Go back to your Landscape palette and click the top save button.

Save your new terrain as a .TER file, keep it safe as we willbe using it in the next part.
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