You set black level by adjusting the brightness control, and the white level by adjusting the contrast.
On my analogue capture card, I can adjust the brightness and contast in the capture driver settings. With the levels set correctly, I can capture the full "gamut" (range of levels) of video from black to white with no clipping or crushing.
If for some reason you have a video capture with a smaller gamut, you can remap by adjusting the levels in post-processing (as described in the guide on the X0 site). After remapping, you then have the full gamut for encoding to DVD.