Ordinarily, I'd agree too, but the OP said, "It isn't even near as good as the original video tape picture." If he used an S-video cable (maybe composite would have been okay, I dunno), and used the highest quality setting on his software, then I would imagine that the resulting video should look as good as the original video tape.
Dan, try a higher quality setting on the software, if that's an option.
But yes, don't imagine stunning DVD picture quality when the source material is VHS-quality.
cheers,
supervij