Rob -- re (2): have you also tried first starting VS8, then switching on the camera, and waiting a little while? (Sometimes it can take up to a minute to go through the recognition routine...)
re (3) -- the capture format is normally automatically set to DV when Firewire is involved. That setting is in the Capture page. When you select that tab and have the camera switched on in PLAY mode and connected via Firewire, the capture format is set automatically to DV (just 'DV' -- no reference to AVI once the camera is recognised. In fact, if you try to choose AVI as the format, it automatically reverts to DV.)
I just fired up my version of VS8 to test it all again -- been a while since I have used it. I have two DV video cameras, a Canon and a Sony. I had VS8 operating, then plugged in each camera via firewire, then started the camera, and after a few seconds got the Windows 'ding ding' indicator and a message saying a new device had been detected, should it use that? I clicked OK and a few seconds later, in the top left of the VS8 capture screen, it showed 'Canon MSDV' and 'Sony MSDV' respectively, and under that 'DV'.
To check still further, go to Tools (top right of screen) > Change Capture Plug-in. If it is not set for Ulead Direct Show Capture Plug-in, then change the setting. That is the DV codec.
Also, in the Options cogwheel icon about a third the way down the left hand side of screen, check to make sure it is set for Type 1 DV Encoder rather than Type 2 (which gives a lot of people trouble).
As for the ownership question, at the time VS8 came out, Ulead was an independent company. Then, more than a year ago now, InterVideo, which makes WinDVD and associated products, merged with/took over Ulead. The product lines of both companies remained competitors, though some of us noticed that some InterVideo codecs were being used in Ulead products thereafter. And more recently, a few months ago, both companies were taken over by Corel. We are still waiting to see what is going to happen to all the separate products. First indications are that only the top end Ulead products (DVD Workshop and Movie Studio Pro) and perhaps one or two of the smaller, lesser selling products, might be discontinued.
I have never used WinDVD Creator so cannot comment on its merits vis-a-vis Video Studio. Suffice it to say, though, that I have been a loyal Video Studio user since version 7.
I should also add that Marojo makes a valid point, though applying it to capture from your Sony. If you can use Creator 2 to capture DV successfully, but you prefer the VS editing interface, there is nothing to stop you adopting that workflow. Many of use here use a variety of programs in editing and authoring any single project. I will often capture with an excellent freeware specialised DV capturing program called WinDV (not to be confused with WinDVD!!!

). You can find it with a Google search. I then edit with VS10+ but usually author with Movie Factory 6+ or DVD Workshop...
The basic message is, don't feel as though you absolutely have to use only one program...