When inserting a 3D model with terrain, the model will attach, but it will not drape. See images...
Now if you look at the back of the building, it attaches to the terrain, but it does not "follow" the terrain...
Any workarounds for this?
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You are correct - the model will not 'follow' the terrain. The best way to deal with this is to have the 'terrain' of your building model match your AIM surface as closely as possible.
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When placing models on uneven terrain I use the method described in this Autodesk blog entry to create a building pad of sorts. Works in reverse as well.
Hope that helps.