JPGs don't upload as GIFs, just PNGs are limited to GIFs but the code change in post three should remove that.
One thing about your
original image is that when I tried to copy-paste the image from my browser into my image program, it had those boxes in it, though I don't see the boxes in the browser.
What I did instead was take a shreenshot, and then I created my own GIF, JPG, and PNG versions of the image for upload. Here are the results:
- http://www.photoplog.com/demo/lite/index.php?n=27 - GIF Test - Okay
- http://www.photoplog.com/demo/lite/index.php?n=28 - JPG Test - Okay
- http://www.photoplog.com/demo/lite/index.php?n=29 - PNG Test - Faded
- http://www.photoplog.com/demo/lite/index.php?n=30 - PNG Test2 - Okay
Note that number four was uploaded after applying the code change from post three. Said change has since been removed from the online demo.
The only thing I can think of is that there is something 'boxy' going on with images you are using that GD can 'see' so images get faded on upload.