Most cameras have poor video quality as compared to a dedicaded video camcorder. Im assuming that by digital looking you mean that the videos are not fluid, and thats due to the frames per second.
Looking at the specs for your camera it looks like the frame rate is either 10 fps for a 640x480 resolution or 20 fps for a 320x240 resolution. This means that one mode will have better quality frames but will also have a "choppier" feel while the other will have a lower quality frame but a more fluid look.
In short Vista may not be at blame but rather the camera since cameras dedicated to photos generally have bad quality video. If this isnt the case please repost the issues that you are experiancing. Hope this helped.
It worked perfect on windows XP but all choppy and then freezes up on Vista. I was wondering if there was a download of some sorts that would repair the problem. I tried with kodak already and found nothing. I downloaded vcl and that did not work and niether does quick time.