Is there any way in which I can use a .png file at it’s original size without it being converted/squeezed and ending up on line as either a .jpeg or a .gif file and showing a halo around the letters?
Pass-though image. This will basically upload the image that you chose and reference it, much as if you were hand coding. You do have to be careful here though, the image has to be the correct size to work properly.
Set the image to .png with millions of colors. I think this is what you are after. Drag the image into the corresponding graphic box, then open the inspector. Go to the paintbrush tab, and set the image to be a png with millions of colors: