I created an image in Photoshop that has: resolution 72 pix/in, 600 px by 800 px (about the average screen size of ereaders)
This is what the image looks like on Photoshop at 100% zoom: http://i.imgur.com/0dNU2lU.png
When I Place the jpg image in Indesign, it looks blurry and pixelated: like this
I looked on other similar threads from google, but it seems those people hadn't been using the correct resolution of 72 dpi. But my images in Photoshop ARE at 72 dpi. Is there anything else you would recommend to do? I would really appreciate any help! 
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Also, if it helps:
- I'm working on an epub document with these settings: screenshot
- This is what the frame fitting options window looks like when I select the image on Indesign: http://i.imgur.com/WqRxAaS.png