Make sure “MP3” is selected and set the Quality to “Medium Quality (128 kBit/s)”.
Note, after you have recorded your episode using GarageBand you must convert it to a format which can be uploaded to the site where it will be hosted. I personally convert the file to mp3. To use GarageBand to create an mp3 file of your podcast episode click “Share” in the navigation bar → click “Export Song to Disk”. Make sure “MP3” is selected and set the Quality to “Medium Quality (128 kBit/s)”.