Eddie,
Please keep in mind, my previous example only really works as a simulation of a waterfall. That is, it makes no sense if you see the emitter or where the particles are falling. Max does not have a good fluid simulator. Real Flow is often recommended.
However, here is screen shot based upon your setup. I created a plane as the emitter for a PArray, and shaped it to the contour of the valley. The PArray is bound to Gravity and a UDeflector. The Udeflector uses the valley mesh, and has just a bit of Friction. You could try adding a Blobmesh compound object, but you will have something closer to lava than water.
Probably the best way to do this is to fake the whole thing. Here is a link to a Teb Boardman article, complete with sample file. It uses animated materials.
http://www.cgarchitect.com/upclose/article22_TB.asp
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