i was thinking... maybe the reason why your chords don't sound right when you pick them has to do something with the action of the guitar. It can be frustrating and it makes playing difficult for beginners because its very hard to get a good clear sound unless you have strong developed fingers. You tend to press harder on a guitar that has high action to get a good clear sound. I know I had a hard time playing mine when I was beginning. I kept on getting muffled sounds and dull notes- I thought I was doing something wrong even though I'm sure that I got the fingerings right. It turns out that the guitar's strings were too thick for me (11's) and the action's too high- things about the guitar that I had no idea about when i was beginning because like you, i also just picked up an old guitar and started playing it assuming that the guitar is in proper working/ playable order- properly set up and everything.