I've done this before doesnt turn out like this. what am i doing wrong?

Importing heightmaps and the things come in all blocky. The images are clearly colored greyscale AND THE MAPPING IS HORRIBLE. dumbed the imports down to 256 x 256 and still horrible… no smoothing at all. even though the locations for the blockiness were the same color. stupid simple import to dotracktest2

The terrain is unusable

Please type out the steps you take to generate this. With a sample size of 256x256 I see

Also please attach the result of the Rhino command _SystemInfo.