You need to look through the folders of your install.
Your first step in modding, you need to be familiar with all the files that make up the sim. That is how I started in 2002. I got the cat extractor and I extracted all of contents of each cat file so I could see what was what. That is where you should start. Once you do that and you see what is in there, then the knowledage base will make more sense.
Modding this sim takes patience and some reading. I can not stress that enough. I wish I had that knowledge when I had started.
As far as the terrain editor goes, I havent messed with it in 6 years. I made a few terrains in 2003 and hated using that f***ing editor. As a few will atest to, keep a gun around with a round chambered so you can shoot yourself after it crashes on your and you lose your work for the 10th time. Also I recommend a good bottle of scotch, even if you don't drink, you will after using the TE, so your drink of choice might as well be a good scotch.