I converted some OK vhs to mpg, mixed it in with some jpg stills using Movie Studio Plat, rendered it, then created a DVD using DVD Architect. The movie clips were very muddy. Stills were crisp.
What is the best way to do this?
try playing around with some of the video effects like brightness and contrast, color correction, levels, saturation, sharpen and more like that. I can't just nail it down for you what to do so I would say get a small clip and make an "exercise video" (this is what I did). I had some old family movies that were put on a vcr tape which was old, playing on an old vcr that had no time based correction, captured to my computer. It was ugly. I was pleasantly surprised what I could do to improve the looks. You might be too. Who knows, maybe you can make a silk purse out of a sow's ear.
p.s. just make sure you don't apply the video fx to your photo's - since they are already good.
It would help a lot if you could avoid using MPEG for your original video files. MPEG is very lossy. Using them as source and then rendering to MPEG again for the DVD is going to result in very poor quality. I suggest you capture them as AVI or DV files.