I haven't tried to use this yet, so the information I am about to give may not be correct. However, I hope it is. According to one of GraPhix' tools for creating DDS textures for MAX, it states the following for MAX terrain textures:
GameGuru MAX Terrain Texture Formats: Dimensions have to be 2048 x 2048
color = BC7 (not BC7 - sRGB)
normal = BC5
surface = BC1 (not BC1 -sRGB)
GameGuru MAX grass texture formats: Dimensions have to be 1024 x 1024
color = BC3 (not BC3 - sRGB)
I don't know if this will help, but I hope it does.
Intel i9-10900K 5.10GHz, 64 GB RAM, Nvidia GTX 1080 ti 11GB, Windows 10 64-bit, dual monitor display