It looks like some interesting stuff is going on here:
<a href="http://greenspiritadventures.files.wordpress.com/2013/05/378244_10151137345114618_830834548_n.jpg"><img class="alignnone size-medium wp-image-38" style="width:822px;height:424px;" alt="378244_10151137345114618_830834548_n" src="http://greenspiritadventures.files.wordpress.com/2013/05/378244_10151137345114618_830834548_n.jpg?w=300&h=200" width="300" height="200"></a>
It's setting it to be small (a couple ways), and then upsizing again. See how it says "?w=300&h=200" after the image url? And then width="300" height="200"?
I'm not familiar with the theme, but when you insert media are you selecting "Full Size" or "Large" under the attachment display settings?
I do feel like there might be something weird going on with the theme though, since when I resize the window smaller they get completely distorted. What theme is it? Book Lite? I'm not seeing the same issue on their deme ( http://booklitedemo.wordpress.com/ )
Here's how the code looks there:
<a href="http://booklitedemo.files.wordpress.com/2011/07/mcm_3764-840x5541.jpg"><img class="aligncenter size-full wp-image-134" alt="mcm_6112" src="http://booklitedemo.files.wordpress.com/2011/07/mcm_6112.jpeg?w=750&h=498" width="750" height="498"></a>
Ah, did you maybe add the inline CSS?
Try taking that out, inserting it large? Let me know if that's at all a solution!