hey pony,
i tried your suggestions but i'm still coming up with the same problems. check out the filter thing - it was set to mipmap (which i've never touched so that might be default?) and the pre-filter bit wasn't checked. tried deleting shader, creating a new one and assigning it before assigning the color map and i still get the same thing.

i did however figure out that the resolution thing changes the size of the texture in the uv window. if i set the hardware texturing to highest, the loaded texture gets really small, but if i set it at default (low) it stays relatively large (still not large enough for what i need.

anyone else have any insight?