Mpeg capture issue in Movie Factory 2/2.5

[GA]

Hello. I am interested in capturing video from vhs/tv to hard drive to then put on a dvd. I am running an old version of Movie Factory (2/2.5). I am new to this program. I have a capture card (Hauppauge wintv pvr pci II).
My issue: I am able to view tv in the capture video screen, but when I choose capture video in a mpeg setting, I get the following error msg:
"Cannot set mpeg parameters error.
Capture failed.
The created file is corrupt and unusable.
It will be automatically deleted.
(13011:1:2)"
Can someone tell me what I am doing wrong?
I have a new dual core gateway pc with plenty of ram so resources is not the issue.
One last bit of info, my pc is running xp media center and I can capture tv, but the format is one that cannot be edited and capture from a vcr is not possible. Please assist.
Thank you, GA

[sjj1805]

Hauppauge include Wintv2000 with their card. I use that to record the programs, then I import them into my ulead programs to edit/create the DVD's.