Hi Gary,
Yes for GMAX. The building tutorial in the FS2004 GMAX gamepack "docs" folder describes how to.
"C:\gmax\gamepacks\fs2004\docs\gmaxSceneryTutorial.doc"
I would gather it would be similar for FSDS, but I haven't tried it in that tool and don't know the specific steps there.
The tutorial is part of the FS2004 SDK
http://support.microsoft.com/kb/555857
download is "fs2004_sdk_gmax_setup.exe" -- scroll down to the bottom of the list -- that is the gamepack including the tutorials and other FS2004 components to plug in to GMAX. There are a half-dozen or so tutorials included, I think you ought to be able to set up the SDK even if you don't use GMAX.
Jack