That's correct, 1:32 is not available - and I'm pretty sure that's not specific to the 18F2620.

When the instruction clock is selected as the source for TMR1 then it's Fosc/4 so for your 32MHz clock the timer would run at 8MHz. You will not be able to get 250ms "in one go" when running at such high speed as 32MHz. What you need to do then is make it interrupt at some faster rate, say 25ms and then count ten interrupts for a total duration of 250ms.

An alternative is of course to connect a 32.768kHz crystal to the TMR1 oscillator pins and run it off of that.

/Henrik.