you failed to provide the most important information here... what resolution is the television?
at 720p everything will be huge and yes any text will be blurry. in general this resolution is not recommended for pc use. think of this as using an old 1024x768 monitor from back in the days of windows 98. everything is huge and ugly but it still can work if you are okay with that.
at 1080p things will be more clear but text will still be less clear than on a small monitor. there is nothing you can do about this as this is because you are using the same resolution but on a bigger screen. think about when you have a photo (say 400x400px) which looks nice at actual size on screen but looks worse as you enlarge it on screen. the same is true with screens. considering the following are all 1080p a 20" screen will look sharper than a 22" which will look better than a 24", etcetera.
i personally use a 40" 1080p bravia for pc use and yes text is harder to read than on my 20" 1600x1200 monitor but the increase of size is well worth it for the multitude of movies and games that i play on it. if using a 1080p monitor just up the text sizes in windows and games by a very small margin and you will be fine.
If you are running windows 7, it should automatically sync at 1080p, and you should be good to go. If not, you can should right click your desktop, and go to screen resolution. Double check it is set at 1920x1080. Occasionally devices won't correctly detect their default resolution for PC setups. You should be able to force it into 1920x1080. If THIS doesn't work, you should check vizio's website, see if perhaps there is a PC driver for your set. My 40" sony worked without a separate driver, and detected the 1080p resolution, as well as the speakers in the audio control panel.
HDMI/DVI should produce a sharper image than analog VGA.
the only thing which pc mode usually does is limit the refresh rate of the tv to 60hz to eliminate the post processing lag on 120hz or 240hz screens. if you own a 60hz tv you can ignore this.
quality wise there shouldnt be any difference between the two. i've been using hdmi-1 for a few years and everything looks great on my 40" 1080p. remember things ARE going to look a little more blurry than a small screen due to the very nature of enlargement but there are some things you can do to reduce the appearance of this such as what i listed prior.
you mentioned vga-dvi....are you saying your output on the card is dvi going to a vga connection on the tv? if so this is a reduction in quality and a dvi to hdmi cable is what you want.