Hey That's such a nice drawing, I don't know why you didn't make it in Illustrator in the first place; unless of course it was supplied to you. My thoughts on this are that you could separate this out: Is there really a need to trace the type? Could you not just simply retype that? If you don't have the font, then try using Photoshop's Match Font feature, to see if it is on TypeKit. As for the mandala/Sun, I'd copy that out into a new document, and reduce the pixel dimensions, to increase the ppi beyond 300, and ideally 600. It will not matter that this gives small dimensions, as the resulting vector file will be scalable to whatever dimensions you require. Save the Photoshop document as a PSD; you could also run a threshold adjustment layer over the line art, and that would help with the tracing operation, too. Hope that helps.
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