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This is easiest explained with a Before & After screenshot. As for why LRR does this, when it comes to levelpicker images, black = transparent. This means that if the greyscale Tool Store or something is black , then, well, that's transparent too - leading you with the strange stuff happening on the left. So I got rid of the 'black' and replaced it with 'very dark grey.' As you can see on the right, my efforts weren't 100% perfect and I'm not quite sure why, but they're much better than the original! The reason this doesn't happen in vanilla LRR is the Levelpicker.bmp has nice black holes in its background where the levels go - so the black is turned into transparency and the layer behind is... more black. However, if you try to put a level anywhere else, or use a different LevelPicker.bmp, you'll notice this play up. Technical note: This was done in GIMP by selecting everything that was black-ish (it has a handy Select By Color tool), cutting it to a new layer , erasing the bits in there that belonged to the picture of the Power Station or whatever just leaving the rock cutout on the outside, sending this layer to top, creating a new layer that was not-quite-black (used R=4 G=4 B=4) , and then exporting as a 24-bit bitmap without color space information. I may put some screenshots of this later. This also means I have my own 'rock cutouts' to use for my own level screenshots, which will come in handy. Download, unzip, and overwrite everything under Levels\GameLevels with it (but backups are always a good idea!)

Replaces Player 5 by default.

Ok, so the reason it's not working the way you expect is due to the bpp. Vanilla LRR runs in 16bpp colour space, your level picker image is 24bpp. When LRR loads the levelpicker image it converts from 24 to 16bpp. 16bit supports 65,536 colours. 24bit supports 16,777,216 colours. As you would expect, this conversion results in near colours being merged. So you can expect R1 G1 B1 to become R0 G0 B0 and this is actually the case in some LRR bmps where the transparent colour is not true black, such as the radar panel.