reducing image size

What is the smallest possible neutrino image that can be built. I’m sure
that back in the days of QNX 4 they used to claim the microkernel only
took up 32K and that the process manager only took another 32K but as far
as I can see procnto starts off at 365K. Is there any way of reducing
this in size.


Not much (if at all). What are you trying to achieve? You can certainly make fairly capable boot floppies, but between procnto and libc, you are going to be fairly large - that is why there is compression support built into the boot image.