I made a single image site on photoshop , it was made for my 1280x1024 screen. Is there a code that would scale it automatically to 1024/768 screens without blurring up the text?

try this.
<img src="yourimg.somthin" width="1024" height="768" alt="">

That should scale it down, but I cant gaurntee that it wont distort.

Regards,
David

Is there a code that would scale it automatically to 1024/768 screens without blurring up the text?
no, there isnt any coding that will do that..

If you just set the width and height it will reduce it to the size he wants, right?

yes, but it will also distort the image. the text on the image will thus be distorted as well which is what they are trying to avoid per the original question.

it would be best to use a smaller image or a bunch of smaller images so the layout is more fluid and expand/contractable.