Md853 compressing files on sd card

got the easyshare md853 on black friday cheap as anything. I got the 1 gig sd card. should hold 240 pictures right? no its saying i have like 840 available. It should be taking up about 3.4 megs per picture and its taking up like barely over 1 meg on the card itself before i even transfer the photos to the computer. The pictures look very grainy with the compression. My settings are set to 8.1 mp 4:3 ratio and everything else is like the highest. any suggestions on how to not have the camera compress my files or something im not thinking of?