I found a work around, so I'm good now, but I will still post those things you need to check it out. It was the bit depth. Photoshop refuses to save under 8, but I found an application called PNG Quantize, pngquant.exe. It has a small batch file and exe you can keep in your images folder. You make whatever you want in Photoshop and simply drag and drop it on the batch file and it will take the 8 bit PNG and make it a PNG with a 2 bit bitdepth. it is easy to find online. Let me know if you still want to png from photoshop, but I'm almost positive now that it was the bitdepth. Kinda sucky still that PS doesn't allow smaller bitdepth even under "save for device or web". PS does allow for everything else though; Indexed colors, custom Atari palette, number of colors, just nothing outside of 8 or 16 bit depth. Odd oversight.