Hi @Rebecca R,
It looks like the data you downloaded includes a 1m resolution DTM in .tif format. You can use QGIS (open source GIS software) to extract a set of contour lines in .shp format from the DTM (Raster > Extraction > Contour..., choose DTM as input layer and specify contour interval in metres). The output .shp will contain two automatically generated data fields: a numeric ID for each contour, and an Elevation value. The .shp can be imported into Vectorworks, appearing as a set of 2D polys with an attached record format. You can then select the polys and use Tools > Records > Modify by Record... > Elevate 2D Polys to convert them to 3D polys as suggested by @Tom W.. (Make sure you set the Record Field to Elevation when doing this, otherwise it will interpret the unique numbers in the ID field as the elevation data, and the results will make no sense at all). You can then select the 3D polys and create a Site Model from Source Data...
You'll probably want to experiment with the contour interval in QGIS to achieve the right balance of detail & file size. After creating the .shp you can also use Vector > Geoprocessing Tools > Clip... to crop the results down to a smaller coverage area. For this you'll need a separate .shp file containing a rectangle/polygon defining the Clip area, which you can create in Vectorworks or QGIS.
After importing your contour .shp into Vectorworks you might also need to reduce the vertex count, using Modify > Drafting Aids > Simplify Polys... (before or after elevating the polys) so the resulting site model doesn't get too heavy and slow.
If your drawing is set up and all files imported correctly in terms of Georeferencing, Origin etc., your site model will be at its true geographic scale and location, and the Use Geoimage Texture option in the Site Model Settings > 3D Display tab should work.