Sega Rally is a lot more jittery than Daytona for some reason, I think the Framesync option in the ini file can improve things a bit. I'm doing these over a wireless LAN, I'm not sure there's any improvement with a wired connection as I still get jittery cars if I'm doing single system play:
(Although I don't think it looks quite as bad here). I think SailorSat was working on a tool to improve this...?