saw your sprite fix thread in a&d
paint messes things up when saving in 16 color because it simply doesn't support it anymore and saves it as a preset palette which screws EVERYTHING up. you can save in 24-bit bitmap perfectly, though
irfanview is a neat little photo-editing tool which i use for indexing (decreasing to 16 colors and assigning a palette). it definitely was not made for individual-pixel things, but it works well for decreasing colors