I cant seem to make a valid sigpic. I have been using Paint and the dimensions were 329x99. The User CP said the maximum was 500 by 100. Mine's within the limits, why doesn't it work?
If I recall there is a size limit or something, try saving it in another accepted (more lossy) format, or uploading it to a image hoster that supports direct-linking and use the Sig creation thing :/
How do I change the format and what format should I use?
I would suggest IrfanView, a free and highly powerful image viewer that is quite simple to use. Just open your image in IrfanView, Save As... and choose whatever format you want.
Now as far as which format you should use, I'd suggest PNG. It's an image format that is only slightly larger than JPG and it is usually lossless.