Thanks for the quick reply, I appreciate more than you think!
Nope, not stretching it down, and my document size was and is set at 42X30 inches.
Already tried locking it and all that...and arranged it in back.
I tried importing the image into cad, and then importing the cad file with the image in it, i exported to the cad with the jpg to dwf and imported and it was still degraded. Tried downsizing the image to only 200K and importing it...and it even degraded the already degraded image more (I know, I can't believe it either!). I looked in every menu (literally just scrolled through every single command and menu) to see if there was a master setting for raster import size limits or defaults.....NOTHING.
I'm trying to do a site plan for a masters' thesis project...I've tried Revit, illustrator, and now Impression....spent much time on the forums for all these products.
By the way, i am using the educational version...could this have anything to do with raster images being unreadable?