You will not get any Grayscale with a Dithered image. It's only 1bit Black & White. The gcode will only generate as two power levels. The Min/Max settings for the laser to turn on/off. If your laser burns are overlapping too much, it will not give you the allusion of shades either. You should find the original image to work with too.
I am trying to help a friend out who purchased the full picengrave suite.. his settings look nothing like the piclaser settings.. is there a easy way to map the settings over from pic laser to picengrave?