I saw the attachment... dunno what you're expecting to see, but the Physics settings are in the Project settings, which is what the message refers too... Unless you're looking for something else? Ohhh, wait... no way to change the terrain's heightmap, or scale, or... I get it.  Yeah,seems to be some missing stuff there...

Take a look at the attachment at the bottom of the posting.  You will notice in the right most modify panel there is no ability to make material changes there is only camera in the panel.

It's not necessarily a problem, it doesn't stop anything from working.  My guess is because the physics for the terrains was originally built upon the Bullet physics engine, whereas the default in IC 6 is PhysX.  I've not done what that message says to do, and the characters still use the terrain as a terrain, so I dunno what is actually supposed to happen, but it appears to work still...  I hadn't bothered looking it up though, so it might be wise to do so... I'll probably do that this weekend sometime.

In the Terrain/heightmap_Large.  When I click on any height map I get this message, and there is no modify panel for texture/materials edit.

I get this message in a box at the bottom of the image viewport.

It does load the selected height map.

Message:
The physics engine in the object is different from the project's engine.
You need to reset the physics for the object, or change the physics engine in project