Try to make the space between individual notes shorter. Listen to the song and play it EXACTLY like it sounds.

It sounds to me like you have the problem a few of my students in the past had...you're concentrating so hard on getting the right notes that you're forgetting to concentrate on how to connect them fluidly. A good idea is to record yourself playing, then compare it to the song you're trying to play. The differences should jump out immediately.

If you got the recent guitar player magazine with Randy Rhoads on the front it was the last interview he done he said that his students would always have trouble with that and so on and it tells you things to practice that...

well, the other thing is that legato playing typically means not picking every not using slides, hammerons and pulloffs to transiton between notes and or positions. But if you're just trying to get smoother alternate picking I would say that the first poster was right on the money. For a little while, concentrate on the feel and the phrasing and come back to the notes and try and balance them equally. Also, a quick tip that I've been playing around with is taking a nail file and using it to round out the point on your pick. I play with dunlop jazz III picks and this makes it sound a little smoother. I got the idea when I read somewhere that steve morse plays with the rounded side of his picks. So that's a quick idea, but don't forget to work on your fret hand.