From Worms Knowledge Base
Mountain sets must be converted from two IFF templates - one for the front layer of mountains, one for the back. While the image dimensions must be 384x256, the dimensions of the mountains in the image themselves must be 384x110 for the front layer, and 384x28 for the back.
Both layers must use an identical 16-colour palette. Palette reference 0 is the transparency, but unlike colour maps and DIY terrains this does not necessarily have to be a dark colour (the template images included with WormsDC use purple, for example). Palette reference 15 is used to fill the space below the bottommost edge of the back layer, most of which goes unseen as the front layer is placed in front of it, but colour 15 should ideally be used as a "substitute" transparency for the front layer, as using colour 0 reveals further sky gradient below the bottom of the rear layer.
If the templates are being created using DeluxePaint it is important that the images not be saved with the "Stencil" feature turned on, as loading mountain sets created from IFF templates with this enabled crashes the game.
Once the template images are complete they must be imported using WormPrefs' "Create Mountains" feature, where the mountain set will be saved as a .MNT file.