The free Character Creation Walkthrough gives them a quick step-by-step guide to character creation. But it doesn't go into how to play, or what all the descriptor, type & focus choices mean.
The Player's Guide covers all the rules information the players will need, but it is 64 pages. Other than summarizing the rules yourself, or getting the players to read the rules before the session, I don't know of any way to speed up the learning process.
It has been a long time since I played Vampire, but - not only is it possible to do a group creation followed by individual preludes - it's the best way to do it.
You will probably need to have a gap in time between the creation session and the first Prelude. There will likely be some tailoring needed once you know the characters. But that's not a huge problem most of the time.
Character Creation for the Mechanics and the Meta
The Character Creation session should be used as a chance to have players become familiar with the system if they aren't already, and to discuss a few details of their characters to ensure they will work together and not have too much overlap.
You also have players discuss meta elements. Perhaps two players want to play rivals. They can discuss these details during this process, decide why they're going to be rivals.
Work up the full character, but I'd suggest telling players that no choices are final. Give them a chance to make changes once they better understand the mechanics and the setting.
During this part of the process, you needn't discuss more than the bare minimum of setting details. You know, just enough to make sure the characters will all fit within the premise. "You're all newly embraced kindred in the crazy world of high finance in the 1980s. Think American Psycho meets Vampire Diaries." Just enough to ensure the characters will work in your premise, and no more.
Prelude for the Setting and Story
Once you have the characters set, you can run individual preludes. This is the stage where you begin to introduce setting and story elements, and it can be run as free of mechanics as you and your players are comfortable with.
It need not be less interesting just because the characters are mortals. But making a story compelling does depend a lot on the GM. If you make the journey memorable, it will be awesome.
The last time I played Vampire, my GM did it this way. I built my Assamite, and then we roleplayed his journey from boy, to man, to trained assassin, right up to the scene where his mentor bites him on the neck and then hangs him up on a meathook. It was horrifying, and gut churning, but it was never dull. Along the way, my GM hinted at what it meant for the future.
You mentioned Initiations in Dogs in the Vineyard. As a GM, I've used this idea in preludes for other World of Darkness games (and other games) to help make them memorable. Players make characters, and then I ask them to ask a question we will answer during the prelude. This helps keep them engaged as they search for their answers.
This way will preserve nice balance between player agency and GM mystery. Players have freedom to create the characters they envision within the limits of the premise, but the GM doesn't reveal too many secrets too soon. I've played it, and run it, and it works well.
Best Answer
Why is character creation not simple? Because you keep in mind all the options and all the rules for them. The solution is not to burden new players with the mechanical parts.
What I do is the following. I do not give my players the PHB until character generation is over. I ask them what kind of character they want and build it for them. I let them describe the character and I translate it into a character sheet. Since I know the options, I can ask questions to decide between them.
Do not be afraid to go back and forth on decisions. Figure out what is important to a player. I had one player describe his character as an elven assassin from the start, but then he couldn't get proficiency in Nature or Animal handling and he didn't like that. He wanted to emphasize the woodsman aspect more, so I switched rogue to ranger for him. What is a major decision for a seasoned player does not hold the same weight for a novice.
This keeps it simple for the players, as I do any necessary optimization to make the character viable and able to do what they want them to be able to. It is also interactive, as I describe every new thing I write on the sheet and they can react to it. I think it also preserves the fun as they do not have to bother with minor rules and exceptions.
The only downside is that this is pretty much one-on-one. If you have multiple new players, make sure they pay attention to the description of skills and ability scores, so you don't need to repeat yourself. Switch between them often. First write down a race and class for each, then ability scores, etc. to hold their attention.