I had a problem in that my avatar that was crisp and in focus on the old site was fuzzy and squashed here. I assumed (wrongly) that my original image was too large and reduced the pixel count only to find that the avatar was then totally pixelated (spelling checker no help!!) so went the other way and tried importing it from the original sized image and using the sites cropping function – it worked!
What relevance it has to your problem I’m not sure, but it may be worth experimenting with the size of the original image.