I suspect that some essential element of what you are doing is not coming across in your description, so you *really* need to post the psd file for an image that is giving you trouble.
In the interim, I have a couple of questions:
1. You said, "...when I have several shades of grey, they are either all selected or just some areas, depending on the Magic Wand tolerance...".
Are you implying that you are starting not with a continuous tone image, but with an image that is already posterized / quantized down to just a fairly small number of gray levels?
2. You also said, "...when my B&W image is set to 8 'levels' in the Cutout filter, I find 20+ actual shades in the image...".
Attached below is (a) a starting contone B&W image and its histogram; (b) the result of applying the cutout filter (set to 8 levels) to it and its histogram.
If you count the narrow, difficult-to-see peaks in the histogram at 0 and 255, you see that there are exactly 8 major peaks, exactly as the cutout filter promised. There are also a huge number of small peaks that almost certainly come from pixels that are at the edges of the cutout swatches. Are these latter peaks the type of thing you are referring to when you talked about "20+ actual shades"?
Tom
