3D Analyst Tools from Toolbox

I recently downloaded the newest version of ArcGIS (10.2.2) to try out some of the extensions that I did not have access to previously like some of the tools from ArcToolbox and ArcScene.

I am trying to drape a raster image (.tif) overtop of a DEM (ASCII/.asc) file but can't seem to figure it out.

In ArcScene both layers appear flat, no visible elevation.

Someone please help