I know nothing about photoshop CS2 or any of that so this might not help. I can't remember why I started saving mine like this but some scrappy sista told me to and it seems to work. I am in psp. I resize to 600ppi or dpi or whatever at 500x500 size. Then I go to JPEG optimizer and just up the anty until I get below 150k for the gallery. I don't know how it works but that particular method does for me. Good luck!
Sara, did you try flattening the image first? If you go straight to "save for web" or resize without flattening, sometimes your fonts/shadows go a little wonky. I always merge all visible layers (Ctrl+Shift+E is the shortcut), then resize to 600x600, THEN do "save for web".