I intend to make a reconstruction of Tenochtitlan that is as accurate and realistic as possible. As a preliminary step, I’ve been working on the setting in the following manner:-

First, I loaded a DEM of the Mexico City region in Vue xStream. Next, I attempted to create Lake Texcoco and place it in the proper location. I used a screenshot of a Google Earth KMZ that showed the extent of the historic lake as a transparent overlay. This I loaded into a PhotoShop layer and sized it until the terrain features matched the DEM. I traced a path around the coast of the lake and filled it. Then I saved a version of the image containing just the white background and the black lake. 

In Vue, I turned the lake into a terrain and gave it a water texture. Then I opened the Mexico DEM terrain and added the lake image to flatten out a lake bed. With the water terrain placed almost level with the coast, things looked pretty good, except that the hard edge of the lake indent has produced a curb-like shadow that can be seen from certain angles. Also, the edge of the water terrain was somewhat pixilated, and that has produced a strange effect in some areas. 

Does anyone know a better way to recreate a dead lake of a specific shape on a DEM? While I can probably work with what I have, it would be nice to have a better result that could be seen from any angle without post work in PhotoShop. My original plan was to modify the Geotiff in PhotoShop to create a smooth-edged lake bed, but PhotoShop 7 wouldn't open it. 

Why not use a simple square 'plane' object for the lake located instead of a shaped one ? Make it bigger than the the lake and the edges will disappear under the terrain ... But may be there is something I don't understand ? Can you post a picture ?

I tried to use a rectangle for the water,  but it resulted in lots of ‘pools’ beyond the lake’s boundaries. This is because some of the land beyond the edge of the lake dips into the water. Move the water rectangle down to prevent this and you end up with a sheer and unrealistic edge to the lake. The lake-shaped water object was actually a better solution, though it is far from perfect. 

Ok I understand now. Did you try to disable the 'Cast shadow' and/or the ' Receive shadow' boxes in the advanced material editor for your water material ?

I wanted to post an example, but the 'Insert/Edit Image' tool brings up a white box labled 'Image Properties' in my Opera browser and there's no way to use it. Funny how this feature worked for me before it was 'improved.'

I didn't disable cast shadows and receive shadows. I'll try that.

Thanks for the suggestion,  pmermino. 

Well, that definitely improves things. It's still not perfect, but when the shores are painted with jungle it probably won't matter.  

Create a map in Photoshop with the shape of the lake, and use that for the alpha of the water material?

Export the map to TIFF with transparent background. In Vue use the function editor to import and connect the alpha of the Tiff with the alpha node of the water material (You probably have to disconnect the connection from the Color node to the Alpha node first). This should make the edges transparent, while the global transparency is still used for the water transpsarency.
Don't forget to set the material to object parametric and use a plane (not infinite) as base for the water.

Cheers!

• Make another terrain, reset it
• Make it have a set height, it's very easy to do, using a large brush and set to a MAXIMUM height of your choice, so you get a perfectly flat cuboid
• use a photoshop image to give the terrain the correct border limits.
• Apply water material

Bingo! :)