Pick a layer in order to replace the existing image with an uploaded image. This will let you test positioning, color replacement, etc. Or do dumb shit.
Common Problems:
An entire color is not being replaced: Are you sure it's EXACTLY the right color for the palette? And you're not using an indexed color profile on the file?
Parts of the sprite's color isn't being replaced:Make sure there is no anti-aliasing or areas of pixels where there's slightly different colors.
No colors are being replaced: Welcome to the wonderful world of Gamma. Things like Paint.net add it to files and it ruins everything, forever. If there's an option to save with colour profile, set it to none or disable it. Otherwise, you will need to use a program to remove it. I use ImageOptim for Mac.