Add Boundary to Terrain - No valid Entity

I have created a car park terrain using "Create from Elements" and want to cut it down to just the pavement area by adding an external boundary at edge of pavement. I have created a 2D boundary (Complex by Elements), but when I try to add it to the terrain as a boundary I get a "No valid Elements Selected" error.  The message itself doesn't indicate why the element is not valid. Any help appreciated.

Being unfamiliar with Microstation, I have also tried creating a closed polyline in Autocad and bringing it into the DGN with Merge to Master. Attempting to add it as a boundary fails with the same result.

This is the error that I am seeing in Message Center. 



BTW: I am using MX SS4 (02.11.09.879)

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