I could just add it as a model, but I heard somewhere that if I add it as a model as opposed to a terrain, it provides severe disadvantages due to rendering speed, collision detection, and memory consumption.

I was able to import the .fbx file in 3D Max 2010 into the Gamestudio A8 MED program. I then highlighted it, clicked the Object tab, and selected "Convert to terrain". However, this message box comes up that states:

I found a Gamestudio webpage that states this about the "Convert to Terrain" option in MED:

Convert to Terrain: Converts the MDL model to a HMP terrain if its mesh is a regular grid. Note that some models might look like regular grids but aren't due to duplicated vertices. In such a case you can fix the model in Vertex Mode by selecting all vertices and executing the Merge function.

Source: http://www.conitec.net/beta/med_object.htm

I tried doing this by highlighting the mountain landscape, pressing the "Vertex Mode" button, which changes the object from looking red, to seeing yellow vertice points all over it. I then choose the File tab, and select the "Merge..." option. I then see a window come up asking me to open a file. I select the MED file that had the mountain landscape saved in it, and press the Open button. It then seems to open the file I had before.

I then highlight the mountain landscape again in MED, press the Object tab, and choose "Convert to terrain", but I get the same error message window as before stating:

Does anyone know how to add a grid to this mountain landscape model?