Power Trace using bad DPI - HELP

Trying to trace a raster image, PT changes the dpi to what seems to be 72 dpi. The trace looks terrible.

any ideas?

Here is what i've tried:

150 / 200 / 300 / 600 / 1200 dpi at 100% (12"x12")
Formats: .jpg / .psd / .tif / .bmp / .png

I have gone through all the PT settings. Line art seemed to work best.

http://img179.imageshack.us/img179/1301/corelx3tracesuck2vl6.jpg

I have tried 0 - 100% smoothing. I cannot seem to get PT to NOT change the Image dpi!