Whenever I import a .PSD, set the layer to the time I want it to play for, and then play it or even export it to quicktime it seems digitized, out if focus, and looks really bad. Once again I'm new at this so i know I'm probably doing something wrong. Help!!
This is because of your sequence settings I would imagine. You're likely cutting a high quality image into a sequence with heavy compression (DV or such I'm guessing). That's just the way it works. If you want to preserve the pristine nature of the photo then your final sequence (after you've locked picture and got your audio mix) should be like 8-bit or 10-bit uncompressed.
Additionally, it sounds like you're making this judgement based upon viewing it on your computer monitor. If that's the case, don't do that. When you put it onto a DV timeline and render it and view it on a computer monitor it will look bad compared to its original form. But if you view on an external monitor or output to tape and view from there it should be okay (at that point it will look like the footage you shot, so it will blend in, well sort of).
