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I use Sigil to edit ePubs instead of Calibre, so some of my advice might be off.
If you open the ePub and view the image, is it distorted there? If the actual image isn't distorted and it's just the way it's being displayed, you should be able to go to Tools/Add Cover and it will correct it.
If the image in the ePub has somehow been distorted, you should be able to add the cover from the Calibre folder using Add Image, then go to Tools/Add Cover.
Sorry if my directions are vague. I'm not at home and am going off of memory.
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