I'd use ArcScan and convert the raster to vectors. On old maps this is a long and tedious process (that I do not miss doing). There are a few other non-ESRI products that aren't bad but ArcScan is really the fastest. You'd still need to assign an elevation to each contour manually.
I'd also suggest taking the TIF into photoshop and first converting it into a black and white image (not greyscale but actual binary black and white) and then manually erase everything that isn't a contour - title blocks, rivers, buildings, etc.. The more noise you erase, the less time you'll spend on vector conversion. I'd also run it through a 'sharpen edges' filter to try to thicken the lines up. Then run the new tif through arcscan and create vectors. Then you'll have to manually assign the elevation values to each vector or just ignore that part if you don't actually need elevations.
Then you can make your dxf.
