Do you see it in a menu somewhere where you can activate a "digital comb filtering" sort of function while recording from composite input? Try recording a sample of your vhs with that enabled.
Experimenting with a fancy composite cable is your own prerogative, but I don't think it would really help your situation. A standard cable should work fine, and it would have to be a stellarly poor construction to not be able to transfer a signal properly within the performance constraints of a composite design.
The appearance/disappearance of strange colors could also be an analog copy protection system at work, as well. In that scenario, your tv is designed to properly lock into the signal for optimal display, but the recorder will not be able to "lock in" the signal, by design.
As for your point #3, I'm thinking the auto-chaptering function would come into play "if" you were recording direct to disc, rather than hdd (my apologies, if I am mistaken that the eh57 is an hdd model).
On point #2, this could actually be in direct conflict with point #3, depending on how you are actually making your recording. (You may be able to have one or the other, but not both at the same time. You might be able to do both, but it will require another "realtime" step, I'm guessing.)
I need your sweet love, Rosetta Stone girl!