Steps taken to generate LOD
Ran xLODGEN to only generate terrain LODs, opened skyrim to cache grass like instructed, ran dyndolod TEXGEN selected generate grass LODs, Ran Dyndolod with grass enabled via expert mode settings.
Grass LOD generated correctly, but is completely grey. There also is a noticeable 20m gap between where the rendered grass ends and the LOD begins.
I am using folkvangr grass, although I'm not sure if that affects anything.