The OP stated that his starter was throwing H2S. H2S production with most lager yeast strains is normal; however, it's a sign of stress with most ale yeast strains.
Mark, try using 50ml of 5% w/v (1.020) wort next time you attempt to start the dregs from a bottle of bottle-conditioned beer. Five percent wort is less likely to stress the remaining viable cells, and it is easier to diffuse O2 into 5% w/v wort than it is 10% w/v (1.040) wort. Old cells need to be babied.
Good catch. I didn't notice that he was making a starter from dregs.
I've changed up my dreg procedure a bit recently with good results (partly based on some things I picked up from your posts about storing yeast under beer). I save about 4 ounces of beer with the dregs in the bottle to be cultured, then add it to 4 oz of normal strength starter wort in a mason jar for my first step. This gives you a half-strength starter, with some of the protective effects of the finished beer (i.e., alcohol and pH). Plus by saving some of the liquid beer, you will not only culture up the cells that have flocced out, but also ones that have remained in suspension and could potentially be a bit more active.
Step one takes a while to really get rolling, but I have noticed much healthier and more vigorous ferments when I step up the starter to pitching quantities using this procedure.