Bad MIP maps wth this setting... palette ARGB 8 bpp | 256 colors + alpha...Ps CS2

I can save with this setting…but the MIP maps are blurred and disjointed. Win xp 32bit Photoshop CS2 with latest dds plugin. Is it supposed to work in CS2?

Solved…DDS cannot create proper MIP maps with this setting…it was never designed to.