Hello,
Could you try opening the converted file using your browser? If it opens and you have no trouble seeing it, then the problem is with Cricuts Design Studio, from the message you are getting it seems it does not support the format.
Make sure the format you are using is compatible with Cricuts Design Studio as well as the encoder settings you are using in Pixillion. If the image file opens up on your browser with no issues then I would suggest you contact Cricuts Design Studio support to see if they have more information on why the program is not accepting the file if it is compatible.