A few things to troubleshoot -
1. Click on the atlas texture generated by 2D Toolkit and look at the "MaxSize". Does increasing it (and clicking apply) change anything?
2. Drag the texture onto a normal unity plane - does it look blurry there? If not, your sprite is probably too small and mipmaps are kicking in.
3. In Edit > Project Settings > Quality, does your selected qualitysetting have TextureQUality set to "Half Res"?