Hello hornsarriba,

The module supports these two options (behind and to the side), as on the upper screenshots. If the images are pixeled, then the resolution of the image is quite low, and after the resize they are pixeled.
As for the formatting, you mean formatting the text in the captions section of the articles entry? Formatting should be applied through the TinyMCE editor.
If the problem persists, don't hesitate to send me a message.

Regards,
kazatzo