Hi Dale and welcome to the forum.
What size are your images? How are you changing the size? Can you post an example?

I take all photos at 18.4 MP and have to resize them way down. I think this is where the problem is happening.

Here is a sample http://www.dsevtp.com/ge

Dale,

It boils down to how you are processing your images.  After you stitch your images together are you doing any kind of processing in photoshop or another graphics program?  We need to know your workflow in order to help you.

Exactly how small are your file sizes?  What size are the final images you are using? 

I personally bring my final images to a size of 5000 x 2500 which works well for me.  Here is an example taken on a Canon EOS 5D

http://www.nastudios.com/virtual/timberidge.html

I resize mine two ways.
1. KissMyImage to batch resize my stills and Panos after stitched.
2. PhotoShop CS4 to batch resize my stills. Starting to use this more.
I shoot raw at 12.2 MP and don't convert from Tiff to JPG untill the very last step.
What method are you using. Are you converting to SRGB for the web?

Okay this is what I do. EOS 7D with a 10 to 24mm wideangle F22. Images from the camera are 5184x3456 @ 72dpi about 7.27 meg. * 12 (shot at 30 degrees each) Then to the stiching process. I use PanoramaStudio 2.0 Pro. I save it as a Jpeg. (I think I should save it as a .psd here)  The image size stiched is 15537x4439 @ 72DPI. Then I take into CS4 for any touch up at this time I resize to about 1200x350 because of size. I'm kind of worried of the end product size meg wise for web load time. What I don't do is save it to the Web and devices, I do a straight save to  jpeg again. Now I get into Tourweaver and put the tour together.

maxxnas I looked at your work and it is beautiful.

Your help would be appreciated.

My first virtual tours (back in the day) I shot with a Sony FD Mavica.  <-- Yes, it used a floppy disk to store the .jpgs.   I shot my images at 640 x 480 resolution and stitched them together.  My final stitch was resized to a height of 320px. It was your basic cylinder tour but even with a cheap camera and low resolution images my tours were still crystal clear.  Looking at your Balloon Tour I noticed several things....

Your approximate tour viewing window is 536px(w) x 432px(h).  This is also a partial cylinder tour.  If you are resizing your jpg to 350px(h) then you are forcing the viewer to stretch your image to cover the viewing area.  That's your main problem.  The are two things you can do to resolve this.   You can either downsize your final stitched jpg to the height of the viewer or make the viewer smaller to accomodate your reduced file size.  Without me seeing your final stitched results and your final resampled .jpg it's hard to say exactly.

If you continue having problems then I would suggest posting your stitched images somewhere so we can have a look at them.