The DPI setting for images is irrelevant when viewing in a web browser. A 200px X 200px image is the exact same image whether it's 72DPI or 1000DPI. DPI is used to set a default scale for physical media like paper because pixels do not have a physical size.

By your description it sounds as if the edges of the images are pixelated? When using a transparent .gif or 8-bit transparent .png you need to use anti aliasing but it's a specific circumstance for these images as you need to match it to the background color. For example if you have a an image that was made for a light background it's going to look terrible on a dark background. Try downloading an image like this, smilie images from forum software would be one example. What you'll find is they have a fringe on the edges allowing them to blend into the background. How to achieve this depends on the software you are using to create the images.

24 bit .png is the ultimate solution because they use alpha transparency. The pixels on the edges can be given a transparency allowing the background color to show through but again they are not supported by IE6 and anyone viewing these images will be presented with a very ugly grey area where the transparency should be. There are some hacks available to make them work.

For the IE6 hack Look up IE6 transparency filter. Easy enough to implement.

Thanks again!

Just go and look for some and find out which is the best for your needs and the easiest to work with.

:)