Both versions looks fine on OS/2 desktop and opens fine on Icon Editor.
May be I misread the message, but how do you get 128x128 pixel icons visible on the desktop as 128x128 icon?
Iconeditor can go up to 256x256 icons, but it will slow down your system because those icons take a lot of space compared to the 40x40 icons. I tried to use a 256x256 icon, but it comes back as a 40x40 on the desktop, even if you have only 1 icon with 256x256 as icon instead of multipage icons with 16x16, 20x20, 32x32 and 40x40 icons.