It looks like you have points at various elevations creating the jagged look. It is best to draw contours on the mesh (you can also magic wand to splines or polylines) and adjust them to the right heights. Do this in plan (click a node on the contour and the icon on the pet palette for adjusting the height) and make sure to check "Apply to All" in the dialog. (In 3D you can only adjust the heights of individual nodes)