I am wondering if there is any other way to build shaded relief within ArcGIS besides using the Hilshade tool, since we do not have 3D/Spatial Analyst. We would like to use our LIDAR data to produce the relief. Of the LIDAR data, we currently have a terrain file, and an elevation points file to work with. I would be willing to use other software for this, but only if I can bring the final relief into ArcMap as a raster, for use in a cached map service.
If you have ArcGIS 10.0 then you can use the hillshade / shaded relief from the Image Analysis window. Once you get the result you like you can export it as a raster dataset. You do not need a Spatial analysis license for that.
I have not been able to make the terrain file work with Image Analysis. I also have contour lines available, but I am still not finding any tools that I have access to (I have no access to 3D or Spatial Analyst). Any other ideas?
Are you referring to a geodatabase terrain dataset or is it some other terrian file? A terrain dataset cannot be used within an Image Analysis window , you need to have a raster dataset to use within your Image Analysis window. You can get a 60 day trial version of Spatial Analyst extension. Here is the link to request for a free trial,