Hi
That is the same camera/ lens combination I have at the moment too. My advice is to stick at it because you will come to learn what it is capable of and where its weaknesses lie. It is possible to get some nice pictures with it but to get really good shots you will need to be pretty close to the birds. My first attempts left something to be desired (even though I thought they weren't too bad at the time). Now I know the limitations I can counter them. The lens is not the sharpest but you will get some decent shots if you get near (best done through putting some food down and hiding out for them!)
With the settings, I choose the same methods as described above. Set the camera on AV and the widest lens setting and let the camera select the fastest shutter speed possible. If it is too slow, I'll up the ISO. At first I used to use 'Sports' mode and I find this works better than the general 'Auto' setting.
I have just bought a tripod too and this is something I'd also recommend as it will help at the long end when zooming to prevent some blurring (though not subject movement).
I took this Robin pic recently with the 350D and 75 - 300 III USM handheld in some overcast conditions. Light will help your pics too, so fingers crossed the weather will hold out! Just click on it to see it properly.
It's not the best in the
Gallery but we can keep dreaming of those nice 'L' series lenses, eh?
Whatever, good luck and share your results. If you post them and ask for feedback you'll get loads of advice and improve quicker
If you need any futher help with the setup or advice, I don't profess to be an expert, but will gladly tell you how I try to rectify all my mistakes as I'm learning
Just PM me if you want
Gareth