V brake / lever help

Any help sorting out some V brake issues that I've been struggling with for a while?

Got some fairly cheap tektro brakes and levers for my partner's beater/commuter a while ago and was really unimpressed. It felt like there was way too much 'travel' in the brake arms to get them to engage on the rim, and even when the lever was bottomed out against the handlebars you could still pedal the back wheel and it would spin. Tried swapping some washers around on the pads to get them to sit closer to the rim, and have recently tried it with some different levers, thinking that the ebay seller might have mistakenly sent us canti levers, as the description of mis-matching canti levers with V brakes from sheldon seemed to suggest that might be the issue

With the new levers the braking is marginally improved, but still feels super spongey, and nothing like the very stoppy V brakes I had on my old mountain bike I had as a kid which would let me do stoppies and skids for days... So what am I doing wrong?

• are the brakes just crap? should I not have placed any faith in cheap tektro brake sets from ebay?
  
• should I be using different pads/add more washers to get them closer to the rim?
  
• is there something quirky about the canti stud spacing on this frame that I don't know about (it's a 1990/1 trek singletrack)
  
  
  

Brake lever fully engaged:

Pad positions:

Brake fully engaged (the rubber bit got completely shredded from the levers needing to be pulled in so tight)