Did you change the terrain mesh?
After giving your terrain an action as suggested by badapple, make sure that the mesh is updated after any deformation has been done to it. Include the following code in your action script:

my.passable = off; // in case it's off
my.polygon = on; // in case it's off
c_updatehull(my,0); // updates the hull for all frames

also, make sure the players model is not passable
hope this helps,
cheers