By coincidence, I have just tried to import an obj file from Blender to Terragen, and have run into this same problem.
Two attachments: first the Blender file, a screen grab that shows that all the normals are as they should be. There are no texture images and the model is consolidated into a single mesh. Second is what it looks like after being dropped onto the terrain (the purple thing is my marker object cube).
Eh. The first attachment didn't stick. I'll post a second reply.