Im starting a first person shooter, and i want it to take place in a desert.

how would i create a descent looking terrain?

would i create a terrain model in lightwave and open the object in my program? or create a hieghtmap image and read it to render the terrain?

please help!

A heightmap is probably the most efficient way to store the data, though you will have to worry about smoothing the terrain to avoid it looking like stair-steps.

look up fractal terrain generation and the roam algorithm. with fractal terrain generation you can generate a random terrain each time you play the game for example.