Okay, two issues.
1. PNG supports two modes, 8 bit and 24/32 bit color depth. IE only supports 8 bit color mode. Your example is 8 bit, this is why yours works in IE. If you look at my sig, its 24/32 bit.
2. PNG supports alpha mode for transparency so you can do proper blending for tranparent parts of your image. this means you get very nice shading to blend with the background. IE doesn't support alpha channel.
Now the above info is a summary from a tutorial on imageshack:
When and how to use internet image formats
Now there are a couple of problems with the above. 1st is that your image is rendered correctly, including alpha. 2nd is that my image is rendered except for the alpha. What I expect the issue is, is that IE has increased support for 24 bit png, but not 32 bit png files. 24 bit is the true colour support, 32 bit includes the alpha chanel, so in effect its four channels not three (like 24 bit) As such image will display but not the transparency.
Now this isn't limited to just IE, a few other browsers dont support png properly (apparently, i havn't tested this myself). So if your willing to limit yourself to a pallet of 256 colours (8 bit) then go for 8 bit png format
:edit:
the link above was written in 2002 (or last updated then). Hence why the info about IE is out of date.