In case it helps anyone - the settings above got me up and running. The only wrinkle was on the tileset properties. When you pull in the tileset and go to tileset > properties, there are two "halves" to the properties display. Properties at the top half of the list and are normal font. That was where I was changing properties and still having problems. Then there are "image properties" in the bottom half. They are greyed out and they are the ones you need to change. You need to click on the image filename, then select the edit button and you can change them. Hope this helps!