There is no "conversion" between a raster image and a vector graphic. Strictly speaking, a true "conversion" would be a grid array of vector rectangles, which would have no practical advantage whatsoever over a raster image. Generating a vector version of a raster image is not a "conversion" in the sense of converting a TIF to a PNG. There is no "translation" of a raster image into a vector graphic in the sense of translating a Corel Draw file into an Illustrator file. 

There is only redrawing what is represented by a raster image as paths, in the same sense that you can redraw an oil painting with a pencil. Autotrace routines (like Illustrator's so-called LiveTrace feature) try to automate that re-drawing by detecting regions of similarly-colored pixels. There is no shape-detection intelligence involved. The autotrace routine doesn't know that the eye's pupil is round or that a football is symmetrical (thus, the "distortion" you are taking about).

So...it's probably easier to just make a redo using the pen tool in Ps on a layer above the original, "tracing" it, then scaling the finished vector however you'd like...

I do know that Ben Willmore gave a lesson on this very subject on creativeLive...but I was so spaced by that time that I really didn't catch half of what he was talking about...maybe if you contact him through his website, he can help. He's a very cool super guru. http://photos.digitalmastery.com/

Then try importing the png to Ps, placing it where you want or before that making it a smart object, duplicating it and on the 'upper' smart object changing the blend mode in the layers panel to one of the 'darkening' group (darken, multiply, etc) which should eliminate the white...but might leave a jaggy image. 

However - it will remain a raster. You really can't make a raster a vector...so, enlarging the raster will inevitably cause 'blurring'. The only way to decrease the blurring would be using (in the fx at the bottom of the layers panel) the bevel-contour but that won't make it a vector, on sort of a sharper raster...or better? Use filter>other>hi pass and changing the resultant 'gray' layer's blend mode to 'overlay' or 'soft light'...you'll see which is better.

Try contacting Ben Willmore...but I think it won't be free... Forget the jpeg or png to vector converters because they're bs...no smart technology involved.

No matter how you slice Bebi the raster will always be a raster. Best thing to do is to import it into Illustrator. I know the pen tool is a pain in the rear end but after a bit I got the hang of it and if I can anybody can. Its kinda like takin' the cap'n and turning him into Don Juan. LOL

moshi: i was doing that, but it was taking the small bits of white i had in the image and making them transparent. i ended up manually going through with the clone stamp tool to get rid of the white, then did a trace to make it a higher res "vector" that i could use. i'll post images when i get home.

Ok, here's what I was working on.

Source image: http://i.imgur.com/fKgtIij.png

This is the original logo: http://i.imgur.com/B8usBPq.jpg

This is the "vector" I turned it into: http://i.imgur.com/hIJFSSE.jpg

And I used the logo to make this, which will be printed at 16x20: http://i.imgur.com/fUamTbO.jpg

Only other thing that sucks right now is that the lines of the circle aren't straight (the original image I used came like that).

Untouched sure it looks like the Imperial logo, without the center piece....looks like a settings cog icon. This is for personal use, and I did manage to fix the lines to make them more straight. Now I just need to pop it back into Illustrator to make a higher res image out of it.