Hi mccltd and welcome to the forum
Modern camcorders with USB connections can be very confusing as this does lead people to believe that they can transfer video via this, but as you have discovered you can only get very low quality - webcam quality!
As advised by Eee-Tee you do need to connect via firewire to get the full quality video onto the PC. Most PC's will not already have this connection, but you can add it on a PCI card that will cost you about £10 from the likes of ebuyer. The card should also be supplied with the required cable to connect from the camcorder to the card.
Mark.