One thing about terrains, they are square. If you pick a transparent water and create an island terrain sometimes you can still see the edges under water. You can get around this by using the center of a terrain and going deep. You can also create an infinite plain, give it a good masking color and stick it below the water but above the edge of the plain. Infinite plains can also be positioned to one side of your work so you can grab them later and change. They don't have to be right under the terrain and your objects. I've had some luck by copying the terrain. I flatten the copy in Z and expand the X and Y. I texture that with sand and place it at the base of the original. The only problem with this is if the land is not roughly circular the beach will duck in under the land at some point. It works well enough to get a good side to work with. There is also a good tutorial at 3Dcafe about making roads. You copy the greyscale from the terrain editor and take it to a drawing program. Posterize a copy of the terrain or reduce the colors. Grab a ring and paste it on to the original texture. If you do this towards the top it could be a road cut in the side of a mountain down towards the bottom it could be a beach. If you use one of the elevation sensitive textures the flat part should be sand. you could also paste the ring onto black and create another terrain to impose over the land and texture it sand. Good luck, P.S. you can animate the waves moving by shifting the position of your water plain between keey frames. Just don't ask me how to do surf.