You've been given some really great suggestions. The cockpit can be
very intimidating until you "know" it. There are a bunch of guages,
radio's etc. You've got kind of cramped quarters, headphones on,
checklists and an instructor that you don't know. It is alot to deal
with. Your sim experience is great for the basics , but it has
nothing to do with the actual mental stress of being a pilot.

I had 4 instructors before I found the one I liked. That's just me,
others say grin and bear it. I strongly suggest NOT giving up on your
dream. Speak to some other instructors. Let them know exactly what
your situation is. A flight instructor may be a good pilot but a bad
teacher. Usually a good flight instructor has a large following and
well known reputation on the field.

IMHO if you get the right instructor and really learn the material you
will develop the confidence and decision making skills that you will
need to be a safe pilot. You are responding to an unfamiliar
situation with a demanding work load with a perception of potential
danger if you goof. Some time just sitting without the engine running
and getting comfortable with the location of everything, a slow start
up procedure, the flow of the checklist, a smooth gentle take off, a
precisely flown pattern and a good landing with the instructor on the
controls and you shadowing would go a long way to helping you.

Doug