Are you using also a TGA file with 24bit colour depth??
Sometimes SH2 files are a bit weird....a good way to be sure you really give the game what it looks for is to copy & paste your image in the old one, then save. PSP will tell you it can't be saved as a dual layer image, but that's no problem. Best way to be sure is to check that both images old and new have the same SIZE as that guarantees 99% it will work.
