Qgis hillshade help?

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Trying to create a topo map from DEM I created using MME.
I'm having a hard time figuring out the hillshading. I have followed a couple different tutorials but my hillshade comes out very grainy. I wonder if I have to high of resolution .
Anybody have any experience with QGIS?
 
I have and got a decent looking hillshade.
Now I'm trying to place labels in specific spots on the contour line, do you have any tips?
 
There used to be a way by right clicking the layer, then accessing Properties - Label. If you scrolled all the way through the Text Label options there was an option called "Define User Position" which calculated text placement according to your table attributes.

It's been a while since I last used QGis so ymmv.

You might also want to check out the following Stack-Exchange article and see if it applies to your needs:

Is there a way to manually place labels in QGIS?
 

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