Part of the problem might be that your image is getting resized twice.
The max size images we allowed to be uploaded and stored with our image hosting is 1024x768. So, your 1600x1200 image is getting resized to 1024x768 when you first upload it.
Then, when you post your auction we resize that image to 400x300 to display in the auction description.
Hmm... you actually have me curious now. I wonder if that 400x300 image gets created off your original full sized image (1600x1200) at the point of uploading or off the 1024 one. It should be using the original image, if possible.
I'll check to see what's happening.