The scaler you use does not even do RGB Digital to RGB Analogue conversion! For this you need a separate device and if you want brown instead of dark yellow, it will need 5V power. Pyrofer's device takes this directly from the VIC-video-port I think. The BIT-C128.com needs an extra power supply or can be powered through the GBS-8220 (or through the VIC-video-port as well if you build the cable). The GGLAB CGA2RGB also needs a power supply to do the brown-conversion.
For VDC VGA Mania you will basically just need a RGB Digital to RGB Analogue conversion like the RGBI2RGBA you mentioned or the BIT-C128.com-device (which I use), or the device Pyrofer is offering on Amibay. Then you just need to output this to a 15-pin-VGA-connector.
For my BIT-C128-device I use the "6-Wire Signal Kit for VGA-to-BNC Cable" offered on the same site for $7.50. If you have a different RGB-Digital to RGB-Analogue-converter you may also use this cable: www.ambery.com/db9todbadca.html
Even less TVs support S-Video than RGB. So what's the reason for converting the 80-column-video to S-Video? Converting 40-column FROM S-Video to RGB would make more sense, I think. Although, seriously, in the long run devices with analogue inputs will be gone altogether, so at some point we have to convert to HDMI.
I've found this other test-program on my hard-disk that someone had posted in March 2014 on the commodore128.org-forum. The new commodore128.net-forum apparantly lost that post. This small program tests the 32 char-height-function of the VDC. If you look at line 20 and 25 it has a special case for VICE. It looks different on a real C128 (see line 25). Your emulator seems to use the (wrong) VICE-behaviour and also seems to be cutting the picture off at the bottom.
I think the CP/M 2.2 cartridge for the C64 is NOT supposed to work on the C128. Bil Herd would probably know for sure, you should be able to reach him on c128.com As for emulation you could also emulate my "VDC VGA Mania", which produces VGA-display-compatible graphic- and text-modes with the VDC.
Managed to compile the binary now, but when trying to load a file it shows "device not present error" - however DIRECTORY works, so it must be the fast-serial that is not working with this compile, sadly.