Using J1.5.10, and just downloaded PagePeel.
PP appears to be working if I use the animated jpg that comes installed. When I switched to a png, the image didn't show. When I switched to the same image in jpg format, it shows but when the peel occurs (it's peeling from the upper right corner), the image shows up at the left side of the ended peel, with only half of it showing.
I tried in IE8 and Chrome.

the URL is: www.northernstatessolar.com

I think I found it:
If the image is not exactly 500px x 500px, it doesn't appear to align correctly. At least that's my best guesstimate without spending more hours on solving it.