You are mistaking The Godfather as a realistic portrayal of Mafia life. In fact, while that is somewhat true of the novel it is derived from, the film is actually a Greek tragedy wrapped in the trappings of a Sicilian Mafia film. Michael is supposed to be noble and doing all the wrong things for the right reasons (such as assassinating the Turk and the police captain to prevent a coalition of families against the Corleones in the coming war), so that he can be the central figure in an inescapable tragedy.
Note that the Vito does not reveal in criminality the way Jimmy Conway and Henry Hill do in Goodfellas, or is he comfortably angsty like Tony Soprano; he has accepted the burden of running a crime family so that he can provide his children–specifically Michael–the opportunity to become respectably successful: I knew Santino was going to have to go through all this and Fredo… well, Fredo was… But I, I never wanted this for you. I work my whole life, I don’t apologize, to take care of my family. And I refused to be a fool dancing on the strings held by all of those big shots. That’s my life, I don’t apologize for that. But I always thought that when it was your time, that you would be the one to hold the strings. Senator Corleone, Governor Corleone, something.
However, the Don’s near murder and later murder of Sonny led to Michael having to take over the running of the Family, and at the end of the first film, become the man that he told Kay in the beginning of the film, “That’s my family Kay, that’s not me.”
At the beginning of Part II, Michael is trying valiantly to liquidate the Family’s illegal business and legitimize the Corleones in the casino business, e.g. carrying on the plan that his father intended. (The wisdom of this is somewhat questionable, given how Las Vegas came to be run by Mafia figures, but it was largely a matter of being able to leverage off of existing enterprises and relationships, such as that with the duplicitous Hyman Roth.) He again ultimately fails, not because of his own desires, but because of the previously mentioned deception and the weakness within his own family (i.e. Fredo). Michael is not an evil man (though he is a Machiavellian one) but he does some very evil things in order to protect, and yet ultimately lose, his family…which ironically is the one thing that his father tells him can make him a “real man”. The strength of Part II is the ironic tragedy; that by trying to be legitimate, Michael weakens himself and loses everything, lowering to the point of murdering his brother for being weak. Part II is one of the few sequels that essentially follows the same general plot as the original film but improves upon it.
Perhaps curiously, I find the scenes of the Vito in Sicily and later Brooklyn to be the weakest in the film. The backstory they provide isn’t particularly necessary, and many of them are humorous and almost cartoonish in nature (such as stealing the carpet, or convincing the landlord to not evict the widow). I guess the idea is to show how Vito came to run the gang including Clemenza, but as Clemenza doesn’t appear in the contemporary scenes (due to a contract dispute with the actor who played him in the first film) the impact is lessened. The last scene of the film is the most critical of the series; Michael, having enlisted in the Marines to fight in WWII (and therefore start on the path of *earning *the legitimate success so hoped for by his father) is alienated by the rest of the family. It is clear from that point (which happens chronologically before any other scene in the film save for the Vito flashbacks) that Michael never stand a chance against Fate.
I think the film is one that that you have to contemplate, and perhaps watch several times in order to gain the full impact. I would encourage the o.p. to watch the films again after a suitable period and see if they don’t gel together better with a second viewing.
Stranger