It doesn't cause errors in the console, but it doesn't look good when in dark maps, you can easily be seen, i should know, i tried one of my Headcrab Zombie decals before making that Headcrab Zombie mod, and i was lit up like a bulb
Even though it's 256x256, does it go to all sides of the canvas? If so, try shrinking it some, being that you're using Paint.net, make a new layer, and use the Prisoner decal as a template and paste it into the new blank layer you made, shrink your Spy decal to that size or something similar, then delete the layer with the Prisoner decal, save your Spy decal, retry it and see what happens