The video looks good on the computer monitor. But isn't comparing a monitor to a tv display a lot different?

Coupla things.
First, the Canopus is a VERY good converter, it's not costing you much in the way of quality.
Second, MPEG nearly always makes original media slightly darker than original as part of the compression process.

So....
You can run a denoiser via Virtual Dub, you can restore blacks using the Vegas plugin. You can add a slight blur (.001/.002) to the avi before rendering to MPEG, you can add a tiny bit of luma and saturation with the HSL filter, and render these out as small sections before rendering the entire file, to compare the results. You might want to set the bitrate a bit higher, around 6500Mb.
The more garbage the encoder sees, the more challenging the encode is going to be. You also might want to crop out the noise of the captured media, as I'm sure you have noise information on the bottom/top of your screen if you came from a VHS source without a TBC.
Try these small tips, and see if that helps.

Spot,

Thanks for the great tips. I appreciate the guide to which plugins would be best to you. (I should check around for a manual on vegas plugins, nothing very helpful in the online manual).

p.s. By any chance are you Douglas Spotted Eagle? I have his Editing Workshop and love it.

>>By any chance are you...

That is him.

The DVD set he made is also EXCELLENT!

I've done more transfers from really poor VHS than I care to remember. Apart from what SPOT has to tell you some preprocessing prior to the encoder can help a lot. Depending on the quality of the VHS I can usually get the DVD to look as good as the VHS, sometimes it will be better.

Main things you need are Time Base Correction (TBC) and Digital Noise Reduction. You'll find these in either Digital 8 cameras and the ADVC-300. The 3D noise reduction in the ADVC-300 uses frame by frame comparison to detect noise and seems to give no loss of resolution in the process. The TBC will remove any jitter which is a big problem with VHS. These things are either impossible or very difficult to achieve once the video is encoded to DV.

Once it's DV then what SPOT has to say is 100% the way to go. Anything that's not part of the image try to get rid off, the encoder encodes everything and if it's not part of the video then bandwidth is being wasted. I mask out the edges to get clean blacks aorund the edges of the frame.

Would using my Sony Video Walkman (GV-D800) to convert the analog signal (from my VCR) to digital satisfy the TBC and Digial Nosie Reduction elements that you mentioned? I could use either one of my camcorders but I think the walkman provides the same signal out as the camcorders. The only problem I might have is not being able to sync the audio to video since I would not be using the ADVC-100 to do the coverting. I wish that I had bought the ADVC-300 instead of the 100.

The audio and video will be in sync, no worries. The 300 has a TBC though, which is wonderful. The 500 is even better, and they are releasing yet another product, announced at Expo, that rocks yet more powerfully.
Glad you liked the DVD set. Next one up soon, now that I've finished my Soundtrack book.
Even without a TBC, you'll be fairly pleased. You can color correct what little will need to be done, it's just a slower render.

The GV-D800 has the TBC and DNR, you cannot tweak the DNR like you can on the ADVC-300 but it's still very useful and you can turn it off. These two additional bits of processing are there so the unit can cope with analogue 8mm tapes, so you don't get that with the MiniDV gear.