Hi Merri.

First select the terrain and click the "Edit Terrain" button.
Now on the terrain panel you will se various tabs: "Painting, Layers, etc.".
In the "Layers" tabs you will see all the surfaces of the terrain.
You can edit the Layer 1 or add more layers.
Select a Layer and click the "Edit Surface" button.
A window/panel called "Object Surfaces" will appear. In "Difusse Map" you can set the file of a texture.
Now select the layer you want to use to paint. Go to the "Painting" tab and under "Brush Mode" select "Layer Opactity".
Now you can paint your terrain whit the mouse right click and erase whit the left button.