Much better, doesn't have the artifacting (distortion) that the first image had.
EDIT: oop, missed the second question. I don't know exactly how Irfanview's options work, but I assume that's going to have to do with whether it's going to save the file as a PNG-8 or PNG-24, and the number of colors it's going to save. A PNG-8 is basically equivalent to the number of colors a GIF has, but with a smaller file size, a PNG-24 can save things in lossless true color like a photograph, though at a large filesize.
See more here:
http://en.wikipedia.org/wiki/Png#File_size...zation_software
This post has been edited by arcman: 05 July 2007 - 01:35 PM