I have brought a PNG file off the Etsy website, and I want to add text on top of it, but once I added text it all distorts and it is very bad quality, but in another instance it did not and the image was fine. Any ideas as to why?
Just guessing, but there is one thing we sometimes see on the #gimp irc channel that matches the symptom:
If your PNG file is in indexed color mode, it will only display with 256 colors in GIMP. Shades of one color are individual colors in this context. Which ones are available depends on the image's palette aka colormap, that's the dialog where you'd see this in GIMP.
I assume the the "very bad quality" means that the text edges are jagged or pixelated. Smooth edges require many different shades of the text color, and those could be missing from the image (see above).
To solve this, change the image mode:
In GIMP's menu, choose Image -> Mode -> RGB
Do this before adding the text.