It works very well for me. I think you have to call all the building functions (there was something in a thread about this last year).
You need a texture and a detail file (there are examples in the sdk demos)
Try this:
dbLoadImage("texture.bmp",2);
dbLoadImage("detail.bmp",3);
dbSetupTerrain();
dbMakeObjectTerrain(1);
dbSetTerrainHeightMap(1, "hmap.bmp");
dbSetTerrainScale(1, 100,0.5,100); //scale Y as you want
dbSetTerrainSplit(1, 8);
dbSetTerrainTiling(1, 16);
dbSetTerrainLight(1, 1, -0.25, 0, 1., 1., 1., 0.4);
dbSetTerrainTexture(1, 2, 3);
dbBuildTerrain(1);