I would consider the coordinate system of the data being used. I recommend setting the scene to a projected coordinate system rather than a geographic coordinate system. The display issue is most likely caused by that. Setting the base heights to match the raster should take care of the rest. If you elevations are in meters, then I would recommend using a metric projection. Otherwise, you might get better results using ArcGlobe, since it is by default in WGS 1984.