Take a close look at your Anti-Aliasing settings. Anti-aliasing is also known as "text smoothing" to some. In Photoshop you can control this in two places - when you have your Text Tool selected, highlight your text. Then:

1. look at the Control Palette (at the top of your screen) and look for a little "a a" icon that show two letter "a" and a pulldown menu. You have 5 options to play with: none, sharp, crisp, strong, smooth. Try each one of these. With "none" your text will appear pixellated (or "chunky"). The other settings will each render differently.

2. you can find the same pull-down menu in the Character palette (Windows > Character). Again, make sure your text is selected.

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The other Experts were right also: make sure your Image settings are at a high quality to prevent distortion, and be careful when you scale your text using Free Transform or even horizontal or vertical scaling. However, this is probably not your issue because you're saying that it appears distorted AFTER you save, and with a scaling problem, you would notice that right in Photoshop.

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The other thing you should consider is HOW are you viewing the JPG, GIF or PNG files? Are you looking at them in some Windows image viewer? Or are you looking at them in a website? If it's in a website, make sure that the <IMG> tag that you're using to display the image doesn't have a "width" or "height" value that may not correspond to the actual width and height of your image.

If you're looking at your image file in a website, take a look at the source code and locate the <img src="myimage.gif"> tag, where "myimage.gif" is the filename of your image. Take a look for a width="xxx" or height="xxx". First, you can try removing them. Just delete that part of the code, leaving the <img src="myimage.gif">. Save the file and take a look again.

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If none of these are your solution, please let us know what you mean by "distorted" and how it is that you are noticing the problem - how are you viewing your image. The more information you give us, the better we can help you.

Good luck,

Tom