Well, I don't agree that we can conclude from this that FrontPage won't upload files larger than 256KB. I have FrontPage 2000 but, unfortunately, I don't have a way of testing this right now. But, I find nothing in Help about a file size limit for pictures inserted into a page. And, I find it quite strange that a photo larger than 256KB can be inserted into FrontPage and previewed in FrontPage and, at the same, FrontPage has a limit of 256KB on photo file size that it will upload. Sorry, but I need further proof to believe that.
So, I think there are other issues, perhaps involving the server end.