Image & Video Quality

[cdurante]

I am finding that when I insert images into AS2 (ie jpg photos), colours are being reduced such that the original quailty suffers. The same goes for video files running within the program. It is like these files are reduced to 256 colours or something once they are in AS2. My monitor is set at 32 bit (I have ignored the 16bit warning) and I have video and image files set to high quality.
Any ideas?