1. The first problem is that since your geometry does not have a material applied, Phantom Scatter has problems recognising it to use it as a 'scatter surface', the term used inside the GUI. Basically what you need to do is assign a material to the geometry (material properties don't matter) and give it a nice, clean, and possible re-usable name. Then when you import the OBJ, you will notice that when you try to create scatter surface using SCATTER SURFACES > CREATE FROM OBJ, your material name is nicely listed and usable as a scatter surface.
It is important to know that materials inside your *.OBJ are essentially scatter surfaces inside Phantom Scatter. So if you were to create new geometry in there with a different material name, that geometry would not get scattered upon unless you applied any of your scatter objects on it. This way you can create different kinds of scatters inside the same *.OBJ.
I didn't know this was even possible, as the *.OBJ models in my workflow always have a standard material applied to them. I will make sure the manual is updated soon!
2. It seems the geometry of your model is at an insanely big scale. Phantom Scatter was designed for architecture (by yours truly) so is designed to work with meters. When I open up your model inside Phantom Scatter, Blender or Octane, it is insanely big. I'm not sure that's intended? What goes wrong is that the triangles become so large that it introduces inaccuracies to the way the matrices are calculated to determine the instances... Basically the scale should be fixed and the detail should be improved.
What I did was open it up in Blender and scale it to 10%:
Then I applied a subdivision surface to improve the quality a lot:
Next up I just imported it into Phantom Scatter, made a scatter object with a POPULATION setting of 100 and a RANGE MIN of 0 and RANGE MAX of 100, and exported. In Octane it now looks like this:
That is 377,000 tree instances!
The weird gaps are gone completely and everything looks alright. I'm using my tutorial tree *.OBJ file to scatter around (which is to scale) and now you see how big your terrain actually is, and this is only on 10% of it's original size!
In the case that your terain is actually to scale (so meters), that means you should improve the tessellation a whole deal so the triangles become small enough to do accurate calculations on.
I hope that helps you out! I'm always on standby for help if needed.
