Decals must be either .bmp or .tga files, uncompressed (12 or 16 kb, I don't remember). Skins must be .bmp files, but the Decals, Edges, Surface things ONLY WORK ON 256x256 BMP FILES. That is a critical thing to remember if you ever want to improve the resolution of your bot skins.
Either that, or if you're actually using Paint.NET, you need to be sure you're working isn't being obscured by any layers above it. For instance, if you have a pure black layer on top of a pure white layer, any work you do on the white layer won't be seen until you uncheck the checkbox beside the pure black layer. That effectively makes it invisible, and you can see what's underneath it.