indexed color reduction causes distorted looking image.

[fracturematt]

When I preview the image it looks fine

but when I hit ok it distorts the image as seen below

what in the world could be going on here?  I almost want to just take the high rez screenshot and import that and work with that image, but I'd rather not have to.

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[barbara_a]

I'm not able to replicate the problem. Double check that Diffusion is chosen instead of None before clicking OK.

Alternatively, when you're ready to index the image, choose File > Export > Save for Web. If you choose 2-up, you can see a side by side comparison of the original and the indexed image that is pretty accurate.

[fracturematt]

Yes diffusion is chosen.  I wonder if one of my photoshop files is corrupted?

[Chuck Uebele]

This might have something to do with the resolution you're viewing the image at. What happens at 100%? You can get an interference pattern. The preview is not what you get. This is the case with many things in PS.

Preview:

At 20%, like your image:

At 100%