MSpaint. Didn't save as *.gif or anything, and I've never seen this happen with rescaling a selection (of course, rescaling the image will interpolate). Not sure what caused it, not reallt interested in figuring it out either =P

Seems ok to me.
What programm do you use?

Hm that is extremely weird since I used the challenge palette image and the colorpicker only. But you're right that image does have more than 4 colors. Heck, the 4 bright pixels on the bottom of his foot are all a different shade...

I've updated the image by hand replacing each color with a grey and then back to the 4 correct colors. Hope it looks okay now...

Are you sure it is 4 colors?
Here you have different yellows(1) and different oranges(2).