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I would just erase my preferences on start up. You can do that by holding down "Ctrl-Alt-Shift" IMMEDIATELY after starting the program. You should get a dialog box asking to confirm if you did it correctly.
Of course it could be the fact that you have multiple slices in your image. Get rid of them all and see if that helps.
Oh yeah, and a minor point of clarification... It's the "optimize" palette, not dialog box... that's why he might be getting confused.
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