Some text layers might need to be updated...

Happened to me recently with the font "Photoshop Large" When I received a file from a friend who is also using PS 7. Everytime I update the layer the text changes size and looses definition and becomes a bit blurry. I was able to mimic the original shape at 90% after some work resizing it but it still looks blurred.
we are both on a windows platform

What *I* don't understand is why when I tell it to update the text and then Save it using version 7, I still get asked if I want to update the text when I re-open the document.

I had a document that had a mix of Paragraph text and point text; the only way to eliminate the confirmation to update text was to convert my point text to paragrpah. Sigh.