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Rodney said:
If you import a low resolution graphic into illustrator (or corel) and just save it as a .ai file, it does not automatically make it a vector image.

That's where the livetrace feature comes in. You have to have the software trace the low resolution bitmap and then the resulting image will be a vector image that you can save as a .ai, .eps, etc vector file.

PS. You can get white t-shirts for much less than $2.48 per t-shirt from just about any wholesale source (ssactivewear, sanmar, broder, alphashirt.com, etc)
Awesome. Thanks Rodney.
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