It says it only accepts 8-bit bitmap images. Microsoft doesnt seem to support this and making one in GIMP it doesnt accept it regardless of whether it is 8-bit or not.

What do you use to make the terrain overlays for Gensurf and how you make them 8-bit?
Edited 3.23 minutes after the original posting.
Edited 4.75 minutes after the original posting.

A 8-Bit bitmap image is one that has only 256 colours in it. If you convert the image to 'greys' you should be able to save the image as 8-bit (greys only is 256 colours). You will need to make sure the Red, Green and Blue channels have been removed. You should then see an option to save as 8-Bit.

As to how you do this will depend on the graphics program you use. One method to force an 8-Bit colour image is to save an image in the GIF format (GIF is always 256 colours), then open the saved image, then you should be able to save as an 8-Bit (colour) Bitmap.

I use GIMP.

Not sure if you have worked this out yet, but here are the steps for making a 8-Bit Bitmap image in Gimp:

1. Open / edit the image :]
2. Select Image -> Mode -> Indexed - then select the option that suits your task. If unsure the 'Generate optimum palette' is a good choice
3. Hit Convert (and wait if the image is large)
4. Save as 'Windows Bitmap'. You should get a box that pops up. The 'Advance options' should be greyed out if this is a 8-Bit image. If you can access the advance options, then you do not have a 8-Bit image. Go back and make sure you have select the 'indexed colors' option.

Enjoy the wonder of 8-Bit colours. BTW, using a greyscale will also make an 8-Bit image, but as you can guess, there will be no colour in the image :]