Sounds like you're running some un-updated stuff. Normally, there's a list of software that's required to run a program that the tool creators list in their threads. Make sure you have all of it installed properly.
Yes and no. For example, if you take the tile you want to insert and break it into 16x16 smaller images (like puzzle pieces!) then you remove the pieces that are the same. In the end (in most cases) you're left with an image that's roughly 1/2 the size of what you originally had. So in a sense they are the tiles you will be using to implement into the game :P