Yeah, I hit this one when creating my Galaxy game.
You have to edit the configedit.xml file to fix
this.

Near the top of the XML file, edit the line that
says

Mode="ADVANCED" Version = "3">

to

Mode="ADVANCED" Version = "2">

Notice the "2".

Also, it should be noted that Wizz.it does not
support the automatic
feature as used by PENG (yes, it has that option
in the software, but when it writes the file it
picks a specific color with FACE="courier new">,
so if any of the images in the file you're trying
to convert use an auto transparancy you will need
to manually fix them).