The reason he distanced himself from it, and the media and UFOlogy groups from him was because of the attack of the giant killer bunny.
I am not kidding.
Carter claimed he was attacked by a giant rabbit that was trying to kill him, and he came across as a loony bin, and gave discredit to UFOlogy.
The UFO report dates are as follows:
The Jimmy Carter UFO Incident is the name given to an incident in which Jimmy Carter (US President 1977-1981) reported seeing an unidentified
flying object while at Leary, Georgia in 1969.
While governor of Georgia, Carter was asked to file a report of the sighting by the International UFO Bureau in Oklahoma City, Oklahoma, which he did
in September 1973. Since its writing, the report has been discussed several times by both Ufologists and by members of the mainstream media.
 Carter doubts that the object was an alien spacecraft. 
and the bunny incident:
The Jimmy Carter rabbit incident, dubbed the "killer rabbit" attack by the media, involved a Swamp Rabbit that caught press imagination after
furiously trying to board then-U.S. President Jimmy Carter's fishing boat on April 20, 1979.
Basically, what it tended to come down to for people at the time was credibility. Since most people considered him to be one of the worst presidents,
that factor along with the bunny factor tended to make him come across as less than credible.
When it comes to UFOlogy and credibility, you are probably aware that credibility is a huge factor in how someone views sighting reports.
Now, whether it be a disinformation tactic or the like, is a wholeother argument. Attempts to makepeople reporting sightings seem less than credible
used to be considered the norm moreso than it is in todays more accepting society.
If his sighting were to happen today, it would be treated in a whole different atmosphere than it was then.
And of course, the best way to ruin someones' credibility is to make them appear to be a loon, or to publish the story in the Sun or The Enquirer,
which for how Carter was treated, is about what happened.
He himself stated he did not feel it was alien in nature, but the picture was painted of him being a crackpot, so it is still considered open, I would
suppose, for discussion. Unfortunately, his credibility suffered enormously, and no one really took him seriously.