Following according to Ulead support, trying now, will posts results of their suggestions as soon as I've tried them:
"1. Please download and install the VideoStudio 8 SE Update Pack (Build Number: 8.01, Release Date: 2004/10/22) from the following link:
http://www.ulead.com/tech/vs/vs_ftp80.htm
2. Make sure you have the latest Win2000 compatible driver for your capture device which you can download from the ADS Technologies Website (adstech.com).
3. Please make sure that cables for capturing are properly attached, and the settings given from the capturing device manual is applied in VideoStudio. Please use minimum length of cables for connection with your camcorder or VCR.
4. If you are capturing using the composite port of your capture card, then try capturing in s-video port. And if you're capturing in MPG then try AVI.
5. In Capture step, if VideoStudio detects your capture device, please select Video Capture driver and not for the camcorder or VCR from the Driver drop-down."