I would recommend saving your original layout in the native file format that your graphics program uses (for PSP8 it is a .PSPimage file). This will allow you to change and re-work your layers later or be able to go in and grab an element or item in a layer to use on another layout more easily. Also, there is no image degradation with these formats because there is no compression of the image. (which also means that they are a lot larger than jpegs).
For posting, I would take the original file, resize it to somewhere between 600 to 500 pixels in width (use a proportional resize) and export the image as a JPEG. In PSP 8, the export wizard will allow you to change the amount of compression and see how big the resulting file size will be before you commit. This way you can "tune" the compression so that the file will just fit under the 125KB limit. After you export, just close the open file, but don't save it since exporting creates a new file and you are still working on the original (and I don't think you want it tiny
).
HTH!