You have to modify your play to beat loose-passive bad players.
They aren't going to fold KTo if you raise PF and bet the K high floprepping AK. Better to make a good hand and value bet them to death. Don't bluff. Play lots of hands cheaply (22+, suited connectors, suited gappers, broadway) and don't continue past the flop unless the flop hit you well (strong draw or good pair hand, set, etc). Don't fall in love with your hand, and don't let it bother you whean they beat your set with a flush they didn't have the odds to call for, bad players will call any bet on a flushdraw.
My $.02
Wow, couldn't have said it better. Especially the part about continuing hands. See the flop then make a "new" decision.