To date the only good results I've had transferring VHS tape to Digital format have been had by copying the VHS to a Digital 8mm Camcorder via the Composite jacks and then transferring it to the Computer via the Firewire.
This has left me with a beautiful 1 gig mpeg file that looks as good as the original but I still haven't figured out how to convert it to DVD easily.
I tried using Roxio EZ Creator but it took two hours to produce a badly pixilated DVD copy of this 8 minute video

I think I will see what Nero can do, it's what I usually use to convert the Prelinger files to Video CD when needed and they look great!
Also, the video I dubbed was probably NOT macrovision protected so I still don't know if the 8mm will copy something that is. I'll have to try a tape that is know to have MV and see what happens.
I'll try a Disney video, if anything has Macro that will. If it works I'll make copies and sell them out of the trunk of my car for $5.00
Just kidding