Just over a fiver, gosh that's cheap, Maplin probably want more than that just for the cable. Most of these dongles rely on the PC to provide all the processing power, so it needs to be a reasonable spec, I should think a 3gig P4 or anything newer should be OK, wouldn't want to try it on a netbook though.
Video inputs on graphics cards and Tv tuners seem rarer than they used to be but certainly worth a look round the back of the PC. Windows Movie Maker is included in XP ( and presumably Vista and win7?) and includes enough editing features for most home use, although it won't do the DVD authoring. Maybe the bundled software with the dongle is good enough anyway.
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VHS to AVI - easy/cheap method? new
VHS to AVI - easy/cheap method? new