You can definitely improve the quality of video that was already transferred from VHS to DVD (including DVD recorders), but it will never be as good as video that was transferred to lossless AVI.
Furthermore, you cannot fix many analog-domain errors. For example, timing errors on a VHS tape (wiggly video, tearing, etc) can never be fixed once converted to digital form. Once digital, the errors are not simply "signal errors" but are now embedded in the image. You can't unring that bell.
DVD can also add MPEG noise or errors. (Block noise, mostly.)
The "miracle" software needed is the usual combo of Avisynth,
VirtualDub, and sometimes TMPGEnc Plus.
Digital video that is lacking analog errors is always best.
I'd need to see a clip.