Each terrain tile/chunk can have up to eight unique materials, but auto-converted maps will have all of the eight layers filled already. When you try to paint a ninth material onto the tile it cannot find an empty slot. The solution is to reassign an unused layer:
- Open the Terrain > Tiles tab. Each tile/chunk of the terrain can have up to eight unique materials which is useful for biome variety, whereas the old terrain only had eight materials across the entire level.
- Click on a terrain tile to select it. In the bottom right you can see the eight layers and which materials are applied to the tile.
- Click on one of the eight layers to select it. The selected layer is shown in the top right. You can now click a material from the list to replace it.
- Painting the reassigned material should work!