Render in terragen 2? You will want to bump up the detail, aa, and the two global illumination ones right below that. detail of 1 is the highest you need, usually .75-.8 is decent quality, .5 is a somewhat decent but quicker, and below that is usually low quality stuff. As for lightwave renders, sorry don't know, but probably has some render settings in there somewhere like terragen.
As for why there's no colors, thats because .ter doesn't store the ground texture at all, just terrain. If you bring into lightwave, you need to also save the terrain's shader, save it as a picture, then give the terrain file in lightwave a material based off that image. Thats just a guess I don't have lightwave, so just guessing from my limited experiences with other rendering software.