You might want to try it with composite cables and compare the difference. More often than not, you will get a better picture with the composite (for various reasons which I won't get into unless you ask. Try it with a few key scenes before asking, and then get back to me.
)The Canopus device looks pretty good, but does it only save to DV? You may be losing some color range when you do this with an analog source. Is it possible to change the codec at all? Just for comparison's sake? (Not that it's necessarily a huge deal, but it can be noticeable to a trained eye.)
"then i use DVDit PE to author the dvd i use the default start up and i convert all audio to dolby digital 224 stereo"
Will it let you author the audio strictly as stereo WAV?
"i read above about avisynth but i dont understand how to use it"
Don't worry - neither do I. I've been able to do everything I need with VirtualDub and such. Then again, I try to use as little video adjusting (filters, etc.) as possible.
"sorry for rambling on but really could use some expert advice"
Ask away. I learned a great deal from these boards as well. We're all happy to share.