Dim sDir As String
Dim DEMname As String
sDir = Me.txtDEMfolder.Text
DEMname = Me.txtDEMname.Text

' Open raster dataset in a workspace
Dim pWsFact As IWorkspaceFactory
Dim pWS As IRasterWorkspace

' set up a workspace factory to open a workspace (a folder) where the DEM is stored 
Set pWsFact = New RasterWorkspaceFactory
Set pWS = pWsFact.OpenFromFile(sDir, 0)
Dim RasterData As IRasterDataset
Set RasterData = pWS.OpenRasterDataset(DEMname)

Set pWsFact = Nothing
Set pWS = Nothing

'Create a raster layer. Use CreateFromRaster method when creating from a Raster.
Dim pRasterLy As IRasterLayer
Set pRasterLy = New RasterLayer
pRasterLy.CreateFromDataset RasterData

'Add the raster layer to ArcMap
Dim pMxDoc As IMxDocument
Set pMxDoc = ThisDocument
pMxDoc.FocusMap.AddLayer pRasterLy
pMxDoc.ActiveView.Refresh