Hi Vincent, thanks for your reply. I have changed this and it still doesn’t work. What seems really strange is that the ‘original’ image is showing up pixelated when I hit ‘save for web’ – I’ve taken a screen shot to show you…

I have tried opening in photoshop and the file looks fine, then again when I go to ‘save for web’ the original and optimized both appear pixelated.
Any help greatly appreciated. I’m a graphic designer who can’t save any files for web – so annoying!