What does pallete and max colors mean??? why wont it let me use the body texture?

[salokink]

when i go to "create" when i am going to make a texture, it wont work for some characters. for ex. when i make a texture for zero suit samus, it says first at the top the texture for her body, and then below it says "max colors:256" and below that it says "it has no palette. do you still want to add this texture?" if you say yes then it says the texture cant be used and when you go into a battle a whole bunch of triangles fill the screen and it doesnt work. if you say no, then her body texture is not added and then there is pretty much no point of making the texture because the body is pretty much the most important part. why wont it let me add the texture and what does the pallete thing and max color thing have to do with anything. please help me because i need to know how to fix it.