Hey Devin,
That "map is too large" error message is unfortunately incorrect most of the time. Sorry about that. The good news is that there is a simple way to avoid that error message for map images that are not too large (which is most of them).
That error message is actually incorrectly displayed when the map image filename contains spaces, punctuation or other special characters, or national (accented) characters. So until the next version of Custom Maps comes out, you need to rename your map image files with a name that contains only letters (a-z, A-Z), numbers (0-9), and dashes and underscores (- and _). If the map image name contains only those characters, then Custom Maps should have no issue creating a map for you.