Uploading images at higher resolutions

I'm sure I'm missing something obvious here, but I can't seem to work out how to upload an image to SL at a higher resolution than 512*512. I know it's possible because I have textures in my inventory at a higher res. Is there a way of specifying during the upload process? Or do they have to be a specific file format or something?

SL will always resize all images to the most convenient power of two on each side. Note that "most convenient" is not always the closest. Usually it rounds down, not up. If you've got an image that's like 640x480, it will likely end up at 512x256.

For best results, always pre-size your images yourself in Photoshop (or equivilient) to the exact power-of-two size that you want. Photoshop will always do a better job of it than the SL uploader will.

As for going larger that 512, your only option there is 1024. It's extremely rare that you ever need to a texture at 1024x1024 though. There are two things of which you should always be aware:

1. First, the larger the texture, the more video memory it consumes. When you view a 1024x1024, you're eating up a whopping 3 or 4 megabytes of memory (note: texture memory consumption and file size are two different things; texture memory has to do with actual pixels, not storage bytes). The biggest reason SL is so painfully slow as it is is because of texture mismanagement. People do idiotic things like slap a 1024x1024 on a 2-foot sign, where a 128x128 would work just fine.
   
   A 128x128, by the way, only uses 48 or 64 kilobytes of memory, a 256x256 uses just 192 or 256 KB, and a 512x512 uses 768KB or 1MB. The reason for all the or's is because textures with transparency are always 33% larger than those without. The alpha channel adds another 8 bits per pixel.
   
   Consider that the average video card can only process a few hundred megabytes of texture memory while the average (mismanaged) scene in SL contains gigabytes or tens of gigabytes of texture data. It's a wonder that it even works in the first place, let alone in any semblance of real time. For everyone's sake, always keep textures as small as is humanly possible.
   
   
   
2. Second, the determining factor in choosing an appropriate texture size for an object is the amount of screen real estate the object is likely to occupy. If it's something that will fill the screen, like a backdrop, a building facade, something with a lot of text that people will zoom in on in order to read, etc, then a 512x512 or 1024x1024 may be called for. If it's something that's not likely to fill the screen, then go much smaller. In most cases, 256x256 is as big as you ever need.
   
   SL is better at blowing up small textures to full screen size in 3D than any other program I've ever seen. For all its faults, SL does have some areas where it really shines, and that's at the top of the list. It's truly impressive that way.