>>Sometimes it's better to just rewrite
>>
>May be such decision should have been taken right away when we got this application here. So far already many efforts were spent, lots of new features / enhancements added, etc.
>
>The customer is really a nice guy with some good thinking / design ideas. I think he believes that the problems (bugs) can be somehow resolved.
>
>In this particular case I just don't know how to proceed.

Be sure to let the customer know your findings, and that as a result, bug fixes and enhancements are going to be more expensive than normal/expected.

Personally, I refuse to do any fixed-price work on systems like that. Sometimes setting a policy like that acts as a "wake-up call" to the customer, that their system really is a mess and they should more seriously consider a rewrite.

One thing you have in your favour, the existing system uses VPM. If you can rewrite using that, it's likely to be less expensive than if the original system was fully custom.