Photoshop is terrible for index colour use anyway.
The best is still Brilliance and Deluxe Paint from the Amiga (version 2E was available for DOS). The closest and simplest alternative I've found for Windows is iMage. It's free but has some bugs. Cosmigo's ProMotion is really cool, but unfortunately has interface problems I can't stand. MS Paint is terrible.
Even though the empeg has a few shades, you're pretty much working only with three palette positions. The two shades are nearly identical that often it's pointless to use them both.
I put a pretty nice Clarion logo next to Tony's Tux which works well on my player. I'd like to redo the Clarion from scratch though. The one I used is based on a larger Clarion logo I downloaded - I know I can make a perfect one if I did it from scratch (I used to do a lot of bitmap stuff
Bruno