Questions about video editing

[elitism]

I am in the military and am overseas. I am trying to make a video from some of the training we have done. I have been using a JVC DV800 camcorder. I use the pixela program that came with the cam to capture the video onto my pc. The cam captures at 160x120 and when I capture it to my pc I can only capture it at the same res. When I try to make the vid into a VCD or try edit the video the res is horrible. Is there any program or advice anyone can give me on how to make this video have a higher res without all the digital pixels ruining the vid? Or am I just screwed lol? Thanks in advance.