It's better to capture in avi. MPEG is already compressed and often badly compressed with capture.
Everytime a video is compressed, you lose some quality. MPEG loses quiet a lot of quality.
The best way is to capture in uncopressed avi. It takes UHGE amount of HD (like 20Mb/sec) but with 160 Gb, you can do it.
With capture software, this software usualy let you chose avi, mpeg1 or mpeg2.
As I said the best quality is with avi. When you have choosen avi, the software should let you chose between Uncompressed or a codecs from a list of codecs installed on your computer. Most of these codecs are very bad and you will want to download good codecs when you need them.
Let's start with uncompressed video, now.
The best softawre available to you now, are VirtualDub, Ulead VideoStudio 7 SE and AviUtl (see the link here:
http://fullart.topcities.com/aviutl.htm ) Try all these 3.
I think only Ulead will have the filter you need, but it's not sure.
For Virtual Dub it will need some internet search to find it if it exists.
For AviUtl, there is no such a filter as far as I know, but this program is realy fast and easy. I will look if there is no new AviUtl filters around.
Once you open an avi file in one of these software, clic on the menus to see the offered tools and options. It's often faster than reading the helps but helps are helpfull too.
It's nothing dramaticaly terroble to learn. Everybody starts one day!
When you have made a project, and want to save it as avi, you have the choice of compressing it or leaving as uncompressed.
Leave it as uncompressed if you want to work on it again later. Compress it if you want to put on some digital support (dvd, cd-rom etc)
What's the end-support for your movies?