Reducing the Numbers of Colours
I'll use the fire
picture for this example.

Select 'Decrease colors to
x' from the menu or toolbar. You might need to increase to 256 or
16 million first if decrease is greyed out (unavailable to click
on). In the decrease window, play with different settings to find
desirable effects.

You may need to edit some of the colours in the palette. It's good at this stage to begin saving as gifs.
You can further reduce the
number of colours by editing the palette. Take colors that are
almost identical and make them the same. Here I'm at 15 colours,
and I want to reduce it further.

This is the current
palette.

There are two oranges that are almost identical, I'll make them the same. There's 4 of them I'll turn black, and a few other colours I'll make the same too.
Reduce the number of colours to the new lower number, in this case 8.
Here's the picture reduced
to 8 colours.

The new palette is

It takes a bit of fiddling around until both the colours and the number of them are correct.
Now you need to add white and grey to the palette. The white will be for the unstitched areas in the sequential charts, and the grey will be for the grid. If white is already in your pattern, you won't need to add it, but you will need to add a grey that is different than any greys you already have in the palette.
In the example on this page, both white and grey need to be added. Increase the number of colours to 256 or 16 million, and then decrease to 10 (8 + the white and grey).
Select Edit Palette from
the menu

Double click on the 9th
space to bring up the colour editing window and select a shade of
grey.

Repeat the above for the
10th palette space making it white (unless you already have white
in the design).
