PNG files are note supported. Well at least not in this area based on the manual (unless it is wrong here)

"The image must be in PCX, BMP, or TGA format."

PGN is supported for sprites and textures but it is not recommended as it is loaded by direct X and can be lost during run-time.

again from the manual

"PNG images behave like TGA images, but are not recommended because they are loaded not by the engine, but by the DirectX library, and are not guaranteed to be automatically restored when the video device gets lost. This means that they can lose their content f.i. when a fullscreen application is minimized."

hope this helps