How to Convert Photoshop File to Illustrator?

I have a Photoshop image file (jpg and psd) for our company that was to have been used for a label we're putting on a battery. The Photoshop image looks great, but the battery manufacturer emailed us back saying that it wasn't printing clearly on the labels. They requested it in pdf or Illustrator format. I am pretty good with Photoshop as I've been using it for years doing web design for our company's website, but Illustrator has me completely baffled. I have an old copy of Illustrator CS and I was able to open the psd file in Illustrator and convert it to pdf. We sent that to the manufacturer, but they said it still wasn't good enough. Now they want it as an Illustrator file, which I assume means they need a vector image.
All of that leads to my question. Can a raster image from Photoshop be converted cleanly to a vector image in Illustrator? I have opened both the psd and the jpg files in Illustrator, but I really don't know what to do. I'm not sure how I did it, but at one point I increased the size of the image and it looked good, but there was rectangle shaped box that defined the original size that I couldn't get off of the image. Anyway, does anyone have any ideas? I am appreciative for any assistance.
Tad

This depends on how the file is built in photoshop. You can do a save as to either Photoshop .pdf or .eps to preserverve vector data, and open this in illustrator. You will have some cleanup work to do, but here is what happens:
Shapes - you get a  vector mask in Illustrator, with an embedded image for the solid color. If you want to change the color, you should get rid of the embedded image, and drop in an illustrator color in to the mask
Smart Objects - you get an embedded bitmapped image - you will want to edit the smart object from photoshop, copy the contents in illustrator, and paste this into you new illustrator file.
Type - Gets converted to outlines. So the quality will be what you need, but you lose the editability. You may need to copy from photoshop and paste into illustrator, and , should you need to make type edits in the future. Many type attributes (font, size) will be retained, thanks to the pdf clipboard, btu you will need to flow these into area text boxes properly.
So you have to take a look at your photoshop file before starting this, and do some converting items to shapes if needed, and removing layers and saving the bitmapped portion of the file as it's own .psd, that is to be placed in illustrator.
Though 300dpi(or twice the lppi) is the typical resolution for photographs, logos adn hard edged items need to be vector so they can take advantage at the resolution of the output device (usually between 2540dpi & 3385 dpi)

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