Jazz 2 tilesets do use 256 colours.

I've known it to say it can't remap all the colours, in which case there are two solutions:
1. Make sure there are only about 160 different coulours in your palette. You can check this using Palette Suite's "Edit->Count Colours".
2. Uncheck the "Remap tileset palette" box. Only do this if your palette has the JJ2 colours, and in the right positions.