Maybe the disk image is too big? My first time making a disk image with the Disk Utility, it turned a 2 mb file into a 10 mb disk image. I think I clicked the 'New' button within the Disk Utility to make the image.

But it works fine if I goto File >> New Image From Folder >> Choose a folder >> and Choose compressed image.

I'm not on my Mac right now, so I might have some of the verbiage wrong.