when you say alpha, do you mean transparency? if so, it counts as a colour. but only full transparency is allowed on PJ, AFAIK, so no 50% green or something like that. you are at 8 colours right now, including the transparency. there are a couple of tools here at PJ that can help you finding out how many colours you have, and also help you find those stray pixels that incrase the colour count. 

http://wouterpleizier.nl/pj/
http://akira.hopto.org/pj/ - this one is more advanced, as is can actually highlight where the pixel is located.

and good job on that dark red. looks a lot better.

Thanks! I've done the odd bit here and there before, and a little practice with dithering etc. but this is the first thing I'd actually call 'serious' as it were.

I believe I've heard about uing absolute black or white before - I changed the black to a deep red, and I do this it has helped. I also cut out the grimy yellow colour for the clasp, as I felt it looked wierd and unnessecarily extended the pallette.

Would the alpha colour be considered as part of the pallette usually? I listed it as eight, but previously (including alpha) it would have been 9...

This is pretty good for the first serious stab. the only thing i'd suggest is avoid using pure black and pure white (000000 and FFFFFF), as they tend to look like cut out areas on an artwork.