Are you trying to upscale to a higher resolution.

Show us project properties, render properties, and Mediainfo for source and output.

For Project properties I have: Custom (768x576; 24,977 fps). I also have progressive scan under field order and pixel aspect ratio of 1 (square). Rendering quality is best and deinterlacing none. My consoles btw. are PAL, which is why it has these settings for resolution and fps.

I got this from selecting "Match Media Video Settings" and then selecting the original recorded video file.

As for rendering I just chose MP4 which was already set at 1920x1080 and couldn't be changed afaik.

As for the other information like resampling I don't know where to find them.

Match your Project to match your Source.

Do not upscale your render. Do not change the frame rate.You cannot make hd video from 240p source!

Written for Vegas Pro but mostly relevant to Movie Studio too: https://www.vegascreativesoftware.info/us/forum/why-does-my-rendered-video-look-bad-quality-troubleshooting-basics--103361/

But when I choose "make a movie" it automatically presets the resolution to 1280x720 or 1920x1080. Of course under advanced options I can select another rendering option, but I don't know which one. Especially since this is a progressive signal and all the other low resolution renderers, of which there are only very little, always seem to use interlaced which causes an even stronger flickering and a less sharp video quality, although the original recorded video was of a decent quality.

Please go to the link in my last comment and give us the information requested in part #6 so we can help you further.

I'm sorry. Now as requested the relevant information:

a)

General
Complete name                            : D:\VIDEO_TS\VTS_01_1.VOB
Format                                   : MPEG-PS
File size                                : 285 MiB
Duration                                 : 37 s 440 ms
Overall bit rate mode                    : Variable
Overall bit rate                         : 63.9 Mb/s

Video
ID                                       : 224 (0xE0)
Format                                   : MPEG Video
Format version                           : Version 2
Format profile                           : Main@Main
Format settings, BVOP                    : Yes
Format settings, Matrix                  : Custom
Format settings, GOP                     : M=3, N=12
Format settings, picture structure       : Frame
Duration                                 : 37 s 440 ms
Bit rate mode                            : Variable
Bit rate                                 : 62.4 Mb/s
Maximum bit rate                         : 9 400 kb/s
Width                                    : 720 pixels
Height                                   : 576 pixels
Display aspect ratio                     : 4:3
Frame rate                               : 25.000 FPS
Standard                                 : PAL
Color space                              : YUV
Chroma subsampling                       : 4:2:0
Bit depth                                : 8 bits
Scan type                                : Interlaced
Scan order                               : Top Field First
Compression mode                         : Lossy
Bits/(Pixel*Frame)                       : 6.018
Time code of first frame                 : 00:00:00:00
Time code source                         : Group of pictures header
GOP, Open/Closed                         : Open
GOP, Open/Closed of first frame          : Closed
Stream size                              : 278 MiB (98%)
Color primaries                          : BT.601 PAL
Transfer characteristics                 : BT.470 System B, BT.470 System G
Matrix coefficients                      : BT.601

Audio
ID                                       : 189 (0xBD)-128 (0x80)
Format                                   : AC-3
Format/Info                              : Audio Coding 3
Mode extension                           : CM (complete main)
Format settings, Endianness              : Big
Muxing mode                              : DVD-Video
Duration                                 : 37 s 120 ms
Bit rate mode                            : Constant
Bit rate                                 : 256 kb/s
Channel(s)                               : 2 channels
Channel positions                        : Front: L R
Sampling rate                            : 48.0 kHz
Frame rate                               : 31.250 FPS (1536 spf)
Compression mode                         : Lossy
Stream size                              : 1.13 MiB (0%)

Menu

recorded by a Pioneer DVR-560H HDD/DVD recorder and then burned onto a DVD.

b) Project Properties

c) Target Delivery Medium

Youtube.

I chose 1920x1280 hoping that the video quality would be decent.

d) Symptoms

As for the first half the colors are darker and more saturated than in the original making it hard to look at. In the second half there seems to be flickering or something like that during movements.

Example:

Render to precisely the resolution, field order, and frame rate of your original.

Please do not expect anything bigger or better because you may be disappointed.

I did so and while the quality is a bit better the video is ridiculously small.

Looking at this I just can't comprehend how others can make videos like this: or this:

I know at least from the first video that it's creator used a DVD recorder as well, but still he can get a much better quality out of it.

Starts small, stays small. Thats the whole point. Your player / teevee will do a better job of upscaling than any software.  But even 640x480 is a stretch.

Consider this -- 240p video has 76,800 pixels per frame and 720x480 has 345,600 pixels, exactly 4.5x more. Where would all those extra pixels come from? We have a technical term for that -- "air."

We have a saying - "You can't make a silk purse from a pig's ear."

Yes its interesting to compare 4 bit ROM titles from the 1970s with millenial 32 bit games. 

My point was, that these youtubers recorded the same two games and managed to get somewhat decent quality whereas mine are lacking.