I suggest you select a short scene, and record it several times with different noise reduction settings and different connections. Then compare the recordings frame-by-frame (copying screenshots your computer may help you with the comparison).
I did the same when I first got my D925. The noise reduction (not variable on the 925 - just a button labelled "HQ" that can be set on or off) softens the image too much for my liking. The s-video out gave better results than the composite (the Y/C separation in the player being better than the capture card).
Also, I assume I should I should use an S-video (instead of a composite) cable since the comb filter is probably better in my newer Sony DVD-recorder (RDR-GX7).... is that a correct assumption?
The second half is correct - the DVD-recorder probably has a better comb filter than the LD player. But if you use an s-video cable then you are using the comb filter in the LD player to do the Y/C separation. Unfortunately, even if you use the composite connection the signal will still go through the LD players comb filter as part of the players Digital Video Processing circuitry - the composite output is simply the Y/C of the s-video output recombined.
The only way to find out which gives the best results is to test different options.
