Yes, this has been discussed here before and there are solutions posted around in various places, but I'll cover it again here for clarity's sake. What you want to do is actually pretty simple as long as you know what the values you pointed out mean and you know the scale of your terrain.
You are correct that the position values are x, y, z where y is "up" (away from the planet at 0,0,0). You will want to set the position and position origin (center or lower left) the same as your heightfield. The key that you're probably missing is that the size is specified *in meters*, just as most measurements of size are in TG2. So provided you know the size of your terrain in meters it's easy to align things.
Unfortunately TG2 doesn't currently have a way to show you terrain size in meters or the height range, but it does respect those values as saved from other applications (provided the other application is using the .ter format correctly - World Machine currently does not, for example). So the best thing to do is check the terrain scale in your heightfield editor first. Then once you've imported the terrain and are setting up your image maps just enter in that same terrain scale and it should all come together. For example if your terrain is 16km square or 16,000 meters to a side, just enter 16,000 into both size fields (x and z). Remember the size is *not* measured in pixels, it's in meters, so you don't want to know the size of your heightfield in pixels (1024x1024), you want to know what it is in meters.
Hopefully that will solve your problem. Let me know if you have more questons.
Btw it makes things easier if you just attach the image in-line with the thread (using "Additional Options" at the bottom of the reply window).
- Oshyan