If quality is your goal, you will be very disappointed with miniDVD. Many problems have been had with this format such as difficulty in editing and hassle of finalizing/unfinalizing/formatting each disc.
Here's how a miniDVD camcorder with a USB port transfers video to the computer. Think of the DVD camcorder as a separate DVD drive for your computer just connected with a USB cable. Once you put a DVD with recorded video in the camcorder and connect the camcorder to the computer via USB, either the Sony software or a message should pop up on the computer saying "What do you want to do with this type of disc?" Just copy and paste off the disc as you normally would with a flash drive or an external hard drive (if you have one) and save the video in a place on your computer's hard drive where you can easily find it. The problem is that once it is on the computer, the file format uses a .vob extension which is not readable by Windows. This is why you need editing software that is specifically designed for DVD camcorder discs. (Windows Movie Maker 2 will not work.)
According to your specs, MiniDV is the way to go. The one problem is your budget. The saying "You get what you pay for" comes into play here. If you don't put a lot of money into your camcorder, your camcorder isn't going to give a lot back to you. Is there a possibility of your budget increasing if you wait a couple months (around $200 more)? There are camcorders for around $400 but as you said, they did not get good ratings. Once you get into the $600-700 range, you can really get a camcorder that delivers what you want and you wouldn't be disappointed. A good place to look at camcorders in detail is www.camcorderinfo.com which gives very thorough reviews covering all aspects of the camcorder. Perhaps you should get a second opinion on the models you were looking at?
I have decided to get my first camcorder and need some help choosing one. What I am looking for...
1) Great picture quality.
2) High Optical and Digital Zoom
3) Excellent low/no light
4) Easy transfer to computer for editing (very important)
5) Good feature set overall.
6) Price less than $400, no more than $500 with tax, etc.
Now I have read enough to know that MiniDV seems to be the way to go for picture quality. However, looking over the reviews here on c|net the MiniDV camcorders don't seem to do all that well. The best I was was rated 6.
I am considering the Sony DCR-DVD108. It looks like a nice camcorder and is highly rated by those that own it. However, it being miniDVD has me worried about not only picture quality but ease of getting the video off the MiniDVD and on to my computer for editing. I have heard that MiniDVD isn't all that easy for that. It does have a USB 2.0 port but I have not found anything to suggest that I can plug it in to my computer and just transfer the video over that way.