Acrobat 5.05 was updated to work in OS X, Distiller 5.x was not, apparently.
http://kb.adobe.com/selfservice/viewConten...ternalId=326968The settings seem to vary quite a bit depending on what application you start with - using any of the Adobe CS3 apps and Acrobat Pro 8, the settings you want are under "Compression" when exporting to PDF.
I don't know if there is an easier way of doing this, but in Word or Appleworks (using the Acrobat 8.0 printer, not "save as PDF") I am presented with a very limited selection of settings - no "job options" per se, but I can select the print quality under PDF Options which then links to the various Job Options settings. You can edit those job option settings (and create new ones) in Distiller. Start up Distiller, then select Settings->Edit Adobe PDF settings->Images. Edit the settings and then be sure to SAVE AS and give the setting a name. It will now turn up in the PDF options list.
Select Print->Printer (Adobe PDF 5.x). Then click on the drop down menu which says "Copies and Pages" and select "PDF Options." Then click on Adobe PDF Settings and select the setting you created in Distiller.
NOTE: I would strongly recommend that you do not modify any of the normal settings already in Distiller - create a new one for this document only and see if it helps. Generally, Acrobat downsamples your images so that they still print well, but are compressed to create a smaller overall document.
I suspect that your image is actually not print quality to begin with as Jim noted. Check the image size using an image editor (or just look in the Finder).