First of all, their equipment is old, decrepit and poorly maintained. Most of their tanks are elderly T-62s (a 1960s design), and T-54s (a half century old design). Fuel shortages make it impossible to train the crews, especially the drivers. Money shortages mean few spare parts and little gunnery practice. Put their 3,000 tanks up against what South Korea and the U.S. has, and there will be a general slaughter of the North Korean vehicles. Iraq had better tanks, and better trained crews in 1991 and 2003, and got quickly blown off the battlefield both times. The North Korean air force is not much better, although they have gotten some MiG-29s, but they cannot afford the fuel for their pilots to fly them on many training missions. Its another massacre in the making. The navy is in slightly better shape, as they have some submarines that could be a problem. Again, these boats dont get to sea that often, which means the crews will make mistakes in wartime.
The big fear down south was always been the hundreds of thousands of North Korean infantry coming across the border, especially through the mountainous, forested portions in the east. But the North Korean infantry is poorly fed, led and trained. Despite diverting resources, including foreign food donations, to the military, there has not been enough to keep the army up to snuff. Even over 100,000 commandoes, long believed to be a key weapon in any move south, are hobbled by lack of resources. Most of these elite troops will have to hike over the mountains along the DMZ, because their air and sea transport is no longer in working order. The South Koreans are also prepared to deal with these troops, at least enough to make sure the northern super soldiers are not a decisive weapon.
Even the North Korean artillery and rockets, many of them within range of the South Korean capital, Seoul, are much less potent than they used to be. Lack of fuel and spare parts has limited training, and the North Korean tactics were never that effective anyway. While a few hundred of the long range guns, and rockets, can reach Seoul (and kill hundreds, if not thousands, of civilians), most of the northern artillery will get destroyed by superior artillery and air power.
The North Korean leadership are apparently well aware of all this. Which is why they place so much faith in nuclear weapons. Only nukes can put them back into the balance of terror game, and provide a credible weapon with which to blackmail their neighbors, and the United States.
North Korea still refuses to exchange its nuclear weapons and ballistic missiles for increased economic aid and guarantees of peace. Even though the population is starving, and the economy is a mess, the northerners hold tightly to their nukes. This seems strange, when you consider that North Korea has one of the largest armies in the region. With over a million troops on active duty, most of them conscripts in for at least six years, North Korea has long threatened to invade South Korea again, as it did in 1950. But the reality of the North Korean armed forces is quite different. Over the last few years, more South Koreans, plus aid workers from outside the region, have been allowed in North Korea, where they see what is actually going on. That, plus more North Koreans have been getting out. This has made it possible to make a more accurate assessment of military power in the north.