There are two versions of this movie; the one made in 1946 and the one made in 1978. The one made in '46 stars Humphrey Bogart and Lauren Bacall, among others, and the one made in '78 stars Robert Mitchum, Joan Collins, and Jimmy Stewart, among others, and is vastly inferior. Not that the older version is perfect, but it's still a hell of a movie.
The 1946 version is total film noir, gorgeous black and white shots, requisite sleaze and hardboiled dames, witty one-liners, sizzling chemistry between Bogart and Bacall, moral dilemmas, and likeable characters. It gets incredible confusing, partly, I think, because all the "inappropriate" bits of the book (which I haven't read) have been cut out - the movie refuses to divulge pornography or gay love affairs, so some of the characters have no motive, and no longer make any sense. But the confusion is actually rather delightful. The primary strength of the film is that the characters are done well; they're complex people, negotiating isues of class and morality in interesting ways. They also have lots of personality, which isn't easy to do, especially with such a densely populated movie. For instance, when Marlowe meets the General, the General burns a few minutes discussing orchids, his beloved hobby. It's hilariously tangential, but gives you some insight into what kind of man he is, and makes him interesting, and more human.
The 1978 version is pretty flat, and rather stupid. Why the setting was moved from LA to London is completely beyond me. Perhaps this was to higlight some of the class issues by demarcating people with different accents (Cockney, Irish, etc), but the effort falls flat, not least because some of the accents are really poorly done. Updating the movie to the '70s and color also seems like a big loss - the story is so film noir that it hurts. Having, for instance, a detective's voice over coming as he's driving his mercedes through the colorful London countryside just seems silly. Also, the morality issues are somewhat squashed by being set in the swinging 70s, where the idea of what constitutes a scandal is different, to put it mildly. Also, the characters are just much flatter and less sympathetic. And though the story seems more clear, it also seems less compelling. The acting is not really up to snuff, but even when it's good, can you really top Humphrey Bogart? Not likely.
Remakes rarely manage to be as good as, let alone better than, originals, and this one definitely fails.