in the default theme that came with ezinstall litestep, the file "layercut" has the code used to make .png image files into the icons for the desktop. Virtually every .png icon image file I have tried to download of the net are like WAY to big. Is there code to make them smaller, good freeware to resize them (I tried irfanview but it ruins the image) or am I just missing something here?

have you tried XNview or all else fails download the PSP8 trail from JASC.com it resizes very well in my opinion and keeps alpha channels intacked(sp?)