I tried with a 176KB file to resize with Format32bppRgb, the resultant size is 2372 KB.

When I applied the ConvertToFormat1bppIndexedFrom32bppPArgb method, I came done to 162 KB.

The same file to resize with Format24bppRgb, the size is 1718 KB.
This time the method ConvertToFormat1bppIndexedFrom32bppPArgb didn't produce correct output file. Do I need to change the method "SetIndexedPixel" for this?
The method only correctly converts the file if the source image it's trying to convert to 1bppindexed is in the 32bppPArgb format. 24bppRgb will not convert correctly and may actually be corrupt, not sure though.

What I would do is right of the bat make sure the image is in the 32bpp format, if not, make it so.

Justin