To use Photoshop 5.5 in this process of adding color to line art, it's important that you begin with the art in Bitmap mode. This will ensure that the image has only two colors, Black and white.

Here the line art image will begin as a scan which is 14 inches wide by 17 inches tall, at 300ppi, and in Bitmap mode. Normally line art needs a much higher resolution, but the irregular texture of my line work allows me to use lower resolutions, without noticing the pixels when printed.

Note:
Adobe Deminsions was used to create the perspective of the lighthouse.