Transforming in CS2: Rotating 45 degrees?

hi, im kind of a noob at photoshop and im making a character for a computer fighting game, but ive hit a stumbling block.

click to enlarge

I want to rotate something thats already fairly pixelated (but its fine because the character is in constant motion, and fairly small) but rotating something 45 degrees makes it all blurry and whatnot. In this particualr frame of the characters animation, i am going to have him be still, so it will be very noticeable if i left him this way.

I know i cant expect perfect transformation because of the shape of pixels, but what is the best way to go about this so that the image comes out fairly crisp.
If its not too much to ask you to explain it to me in detail because i dont know my way around photoshop too well.

The character itself is done, im simply adding sprites that make the character have unique introductions when he faces other characters. Anyways, if anyone is interested, heres what my guy looks like in action. As you can see, his pixels arent too noticeable, only in that frame that i posted earlier.

click for larger

What is the resolution of the image?

I see in the screen cap you are viewing at 230% is it THAT pixelated at 100%?

If the image is 72 dpi you'll get a little pixelization apon rotation.... but if it is lower than 72 you'll see alot more.

this is actual size of what he will look like. He is fairly pixelated, but because of the background and constant motion, its never heavily noticeable. only in this frame, because it will be a still frame, i need him in the position in the first picture, but rotated. I just wanted to know if there was a better way to transform him 45 degrees, because there is often many ways to do something in Photoshop, but there is a best way usually.

edit: dang, the image hosting thing changed my image from a .bmp to a jpg, so its a lil not as crisp as it should be...

so there is no alternate method?

on some other boards people suggested that for perfect non-pixelated rotation at angles or than the 90° and such that i would need to use flash.
What do you think of this approach?