It sounds like you may be using an old workflow. Terragen 3 supports most DEM formats natively and since Terragen's own TER format does not include georeferencing, it is much harder to line up real-world data with multiple TER files, image maps, etc. Instead we recommend using the Heightfield Geog Load and Geog Image Map Shaders to load the data natively in its *original* format. As I mentioned, Terragen 3 supports a wide variety of standard GIS data formats now. If you're using Terragen 2, we'd strongly recommend upgrading to Terragen 3 if working with GIS data is an important part of your workflow.
- Oshyan