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Why do some color pictures appear to be black and white in the input source pop-up menu?

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Why do some color pictures appear to be black and white in the input source pop-up menu?

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In order to produce the smoothest, highest quality images when performing its color reduction, Videodelic converts 32-bit color images to 8-bit grayscale. This provides 256 gray/intensity levels. It is possible to perform the reduction in color, but there is a loss of smoothness in the image due to the required dithering. If the color mode is System clut when images are imported, they are imported in color.

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