I followed the tutorials and set the height map as the alpha channel in the diffuse texture, and specular as alpha for normal texture, but the result looks really crazy. http://i522.photobucket.com/albums/w347/bethdeacon/wtf.jpg .

It seems that the parallax effect is 'turned' 90 degrees. This even occured when I applied an original Oblivion parallex texture. I guess it's something with the model? It's just a round surface with flat UV.