1. Use Virtual VCR to capture from the VCR going to the huffyuv lossless codec.
2. Use AVISynth to fix up the degraded tapes (also in the guide).
3. (Not free) Use Tmpg Encoder 4.0. It was worth the money for me because I wanted a fast, reasonably high quality mpeg2 encoder. But there are certainly free options instead.
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I've found the Doom9.org's Capture Guide as the best place to get information.
1. Use Virtual VCR to capture from the VCR going to the huffyuv lossless codec.
2. Use AVISynth to fix up the degraded tapes (also in the guide).
3. (Not free) Use Tmpg Encoder 4.0. It was worth the money for me because I wanted a fast, reasonably high quality mpeg2 encoder. But there are certainly free options instead.