Photo Express 6 - severe image degradation after editing!

[BerlinerPooh]

I have used older PE versions in the past but this is the first time I have experienced problems after "playing around" with a photograph. Whether I add text or special effects, the end result is always the same. When I save the picture as JPEG under a different file name (so I do not destroy the original) I end up with a picture that is barely recognisable and completely useless! When I tried to save it as a GIF the image is considerably better albeit very grainy and much larger in byte size.

I expect to lose some quality but not to this extent!

Any ideas where I might be going wrong?