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/

Thing is, I didnnt actually create the image from scratch, I modified another image to make a logo.(Noob status here, cant use the pen tool, I seriously just discovered guides a few weeks ago.)  I wanted to make a vector out of it so I can print it large scale without distortion. It's just a simple gray scale logo, so doing an image trace in Illustrator was working, except for the white/trans issue I'm having.

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.

Maybe this will help? 

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

Jim...Image trace won't produce a true vector. That's because Illustrator has no 'intelligence'...in other words, your eye sees which part of the image you want, but that's only because the brain processes the image into 'yes' and 'no' areas. Image trace cannot do that, and Bebi said in the OP:

If she used the quick select (or any other selection tool, and ran "Refine edge", even that wouldn't produce anything but a raster. The edge pixels would still not be a path...they'd be rectangles or squares filled with info in which Image Trace has NO way to decide 'yes' or 'no'. So, she'd end up with jaggy edges at best...and not a scalable true vector...

It's actually a lot easier to to learn the Pen tool and create actual vector graphics.

Unfortunately, a raster is a raster...it has info filled pixels. It is not a vector which is a mathematically determined curve...a line without pixels or raster content. All pixels are filled with white/black and a hue (information). For any software to choose what to keep/discard it would have to have intelligence. Threshold won't do that...and selecting 'white' will not produce a smooth 'whiteless' gradient from black to transparent...because a vector has none of that content...by definition.

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.

Oh well, I tried...lol. 

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).

bebi...just saw this in my email:

https://helpx.adobe.com/mobile-apps/how-to/capture-shapes-illustrator.html

Looks like a vector path is created which is editable in Illustrator (probably Ps as well).

Hope this helps improve your logo! That "original"? Looks suspiciously like the Imperial logo from Star Wars... so, check to see if it's legal to use...

Use the links I gave in #11 and/or #12 this post: https://forums.wincustomize.com/463456/page/1/#3537337

for the Imperial logo.

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.