A $40.00 mic is going to be noisy, it's just the nature of the beast. You are not going to get the quality of mics costing 20 times as much. Also, the audio components of $250.00 camera are going to take a back seat to the visual components, so the audio preamps will be noisy as well. You get what you pay for.
Another problem you may be having is that your levels are not "hot" enough, allowing the tape hiss to be heard. See if you can increase the mic gain a bit. Is the scene quiet? Increase the gain and get the mic as close in as you possibly can. Is the scene loud? Back off on the gain until you are just below distortion levels, then drop the level back another notch or two. Do A LOT of testing/experimenting to give you an idea of your mic & camera audio capabilities, where the distortion levels are, etc.
What sounds are in the environment where you are shooting? These days even budget mics have a fair amount of sensitivity and can pick up more ambient sound than you realize. Another problem is that budget cameras and mics tend to hype upper frequecies in an effort to make things sound "crisper" and end up adding to the "hiss" factor.
I know that this doesn't solve your problem, but I hope that it has increased your understanding.
