<layer label="Elevation" type="dynamic" visible="true" alpha="0.9" url="http://myhost.com/ArcGIS/rest/services/elevation_only/MapServer"/>
Try publishing/loading as a MapService as type="dynamic". I get the same error if I try to load a raster as a feature.
This works for me to load a raster service:<layer label="Elevation" type="dynamic" visible="true" alpha="0.9" url="http://myhost.com/ArcGIS/rest/services/elevation_only/MapServer"/>
R_
I do not use the app building. However, I suspect that once you publish it as a MapService, you would add it just like any other MapService in the app building.
Suspect you just go to the raster service, and don't "drill in" to the sublayers as that will make it type="feature".
R_
http://gis01.wch-rcc.com/ArcGIS/rest/services/elevation_only/MapServerwithout a /0 at the end.