I have seen so many posts lately that have been problems with this so i thought i would help out by showing how to Set Indexed Colors and the Getting the correct colors (note: there are 9 images i have set them to low quality to save on load time.)
(i was using Photoshop 7.0)
First Create a new image in Photoshop.
Make sure it is RBG and the correct size.
Click on Image -> Mode make sure "RBG Color" and "8 Bits/Channel" are checked. Then click on "Indexed Color"
Then when the new box apears click on the Pallet Drop Down Box and choose Custom...
In the new menu Click on the Load button
In the load menu select The Pallet file acording to the Version of dragon you are using, in my example i'm using Dragon Mod 11.
when selected click the load button
When the previous screen apears click on OK
And click ok on the Indexed Color menu to.
Now as you can see the colors have been changed and the image is indexed, you can now start to work on the map itself.
Good Luck