I am looking for some help ironing out some blur issues I am having with a borrowed camera (Pentax K10D with Sigma 18-50/3.5). I am hoping it's just me and not the gear, but would like to know how to fix it.

Here is a sample image. They are not all this bad but all have a noticeable lack of sharpness.

IMGP0904.jpg

Yeah, a boring scene with bad lighting - I have no choice over the viewpoint or field of view as I'm duplicating historical photographs. This one is north-facing and I chose late afternoon to try to at least get some sunlight on one face of the war monument.

Shot in RAW+JPEG, P mode 50 mm 1/125 f/8, hand-held with stabilisation on, and tweaked in Adobe Camera Raw to remove chromatic aberration, sharpening plus tweaks to tone/exposure to bring up foreground and tone down the sky.

I still think I need to re-think the lighting (maybe light the street well and bring up the monument in photoshop?) but what really has me stumped is the lack of sharpness. Have a look at this 100% crop:

IMGP0904 peep.jpg

OK, the haloes on backlit chimneys etc are probably an unavoidable consequence of severe backlighting? But what about the blurriness in the signs, which are in the shade? The in-camera JPEG looks similar here so it's not just my ACR fiddling doing it.

So, what's the problem? Is this the best I can expect from this lens? Did I not hold it steady enough? Should I turn off IS? Is AF hit and miss - should I shoot a few times in the hope that one's not blurry??