Converting CYMK to spot color?

Question

Alright, i just read the 'how to get help quickly', and will attempt to not let my panic show through too much:
I designed graphics to go into my college's literary magazine. I used only two colors: brown and green (8dc63f and 603913). However, last week he informed us (the magazine production people) that RGB wasn't acceptable, since he was going to print in something called 'spot color'. Never heard of it before, but after reasearching, I think I have a vague grasp on it: basically instead of CYMK printing process, he's just going to have two plates, one with each color, and stamp them on the pages (like screen printing). That's fine, but I don't understand how it relates to my files. So we sent the psd files to the printer's "photoshop specialist" and then yesterday I was informed that there was no way to seperate the colors into pantone plates, and that either the book was now going to be blank (thankfully the cover is going to be printed seperately in CYMK so that's fine), or we could use clipart (!!thanks for discrediting a semester of my work), or I could learn to use illustrator and redesign the whole book by monday.
I panic, obviuosly, because after downloading the trial version of illustrator I realized that it's actually nothing like working in photoshop (where's my tablet sensitivity? this is NOTHING like 'illustrating'), and at the end of last night's terror, this is all i could produce:  http://img576.imageshack.us/img576/2993/illustrator.jpg
Now for reference, the image I originally made in photoshop looks like this (when placed on a brown background to simulate paper): http://img829.imageshack.us/img829/7015/photoshopf.jpg
I am very confused, because I don't understand why the printing company can seperate the illustrator file into two color plates, but not the photoshop file. Both use the same colors (Pantone 375 and Pantone 161 C, I've learned). I have no clue how to save ANYTHING in 'spot format', the only difference between photoshop and illustrator is that I can click on the pantone swatch in illustrator.
Obviously I'm ignorant and confused, and I appologise for that, since it only makes this situation worse (who knows if I'm using the right terminology).
tl;dr:
I have a whole bunch of psd files that need to be converted to something called 'spot color format'
the images are graphics to be placed in an indesign file, not to be printed on their own, so really, they have to be in the spot color format.
Is there any way in reality to maintain the quality of these images and convert them into 'spot color format'?
I'm still trying to understand illustrator (I'm really a painter, not a designer -- wtf is a vector), but would love to convert the psd files I already have into something usable. the printer people didn't know how, I don't know how (or even understand the issue), but maybe you will?

Answer 1

I tried this with the image you posted, so I can describe in detail the steps.
From the image menu choose Duplicate to keep the original for reference.
From the Image menu choose Mode > CMYK Color.
In the Channels palette, delete (by dragging to the trash there) all channels except the Yellow and Black channels.
Double click the icon of the Black channel and in the window that opens click on the color swatch, then in the next window that opens click the Color Libraries button, and when the next window opens type quickly on your keyboard 161, make sure the desired color is picked and press OK on this and previous window to apply.
Repeat the same for the Yellow channel but choose 375.
Select the 161 channel (former Black) and press Ctrl + L to open Levels. Drag the middle arrow of Input Levels referring to the original to get similar darkness (to me around 0.30 looks similar shade). Press OK to apply and close.
Hold Ctrl and click on the icon of the 375 (former Yellow) channel to load its shading as a selection, and press Ctrl + Shift + I to invert the selection.
Make sure the 161 (former Black) channel is selected and press Ctrl + L to open Levels again. Move the right (white) arrow of the Output Levels (at the bottom) until the background matches in brightness the background of the original (to me 150 looks similar).
That's basically it based on my quick try with your image. This example should help you understand the basic idea and from there if you like, you can further play with the image if you feel you can make it any better with these two colors.
Regarding Spot colors, the idea is that a printing press uses 4 color plates (in Photoshop represented as the four CMYK channels when the image is in CMYK color mode) to print all possible process colors by mixing these four colors (inks). Spot colors are pure inks in cans and each spot color (ink) requires its own plate. Sometimes people print 4 process color plus an additional spot color for achieving a special effect like gold ink or pure corporate color to ensure color consistency which may not be as good when using the four colors mix. But very often, spot colors are used for printing with less than 4 plates to save money and sometimes for artistic effect with special inks.
Following the above example converts the CMYK document to Multichannel Color mode and you have only a few file formats available for saving in the Save As options. From these, practical ones are DCS and PSD files. Both are OK for printing but you may want to confirm with your printer. However if you want to place Multichannel image in programs like Illustrator or inDesign you have to use DCS.