It would be best to first read the IP Cam Talk Cliff Notes in the IP Cam Talk Wiki. The wiki is in the blue bar at the top of this page, this is valuable information to help first timers.
John
Its not so much a camera settings as it is the type of camera you are using. Dome cameras in general do not perform well in some outdoor environments due to the dome collecting dirt and water spots and the IR from the camera at night is reflected back into the lens. Try cleaning the dome inside...
Cameras Linked to Chinese Government Stir Alarm in U.K. Parliament
There are numerous threads on this site explaining the importance of securing your network and preventing cameras from having direct access to the outside world. It's really not that difficult of a task if you have some basic...
Some of the bullet points under "Users should consider the following lessons" are Timely update your device's firmware, and Do not port forward your devices. This should for the most part should sum up why they get hacked. The back door wasn't broken, it was already open.