good news: your PC is doing what it is supposed to.
bad news: your camera has issues. My Sony used to do capture just fine with movie maker. then my wife dropped it. now whenever I hook into my PC, all I get is the camera saying"DV-IN", but no workie workie on pulling video from the camera. The only thing that I can think of that has a shot of fixing your issue is if you need a driver for your camera from the manufacturer(you shouldn't, XP should have already), or your camera is not set up in it's own menu/ configuration (that shouldn't be it, it should all go automatically.)
i.e.: I think the firewire/1394 on your camera is broken/ defective.
** on mine, I plugged in my friend's camera to my system, same camera as mine, and all was good- thus verifiying my diagnosis. **
edit: DV IN says that you can send video IN to the camera still... Just not out..