i put a new layer at the bottom and can merge from there. Just no compression for obvious reasons.
I've tried merging layers too but that didn't work, so I tried looking for a Decompress button(Though there's not even a Compress button on Paint.net) but I couldn't find any button to decompress.
Below is a working tail overlay file I made, is there any difference between it and the non-working file?

You can use both tail files in your own presets, no need to credit me.