The EasyCap device sits between the VHS machine and the PC. It plugs into the USB port. The A/D happens in the device and is fed to the USB port. If I try capture from Vegas it only allows DV or HDV.
i had one of those, but got rid of it, as it was so awkward and painful to make it work, it was dropping frames and all sort of problems... i remember that there was some kind of driver that needed to be 'adjusted' to make it work in w7... but it's been a long time ago and not a chance that i'll remember any details.
i used virtualdub to capture (it's free, just google it if you dont have it already)
Bit of a blast from the past this one! I always used a camcorder with 'passthru' enabled. Feed the VHS into it, then use the firewire out to your PC. Vegas will capture that just fine.
Take note of Grazie's advice re turning off scene detect etc.
And if you can't find such a camera then you will need an A to D converter such as one of the Canopus ADVC devices. The other an essential thing you will also need is a firewire input into the PC (and the USB/firewire connections aren't reliable enough for making this sort of a transfer).
All of the USB based video capture devices come with their own custom USB device drivers. If you don't have the proper device driver, your card is useless.
The standard for video capture is via a Firewire card. Windows has built-in drivers for these cards. You can pick one up at Amazon or other electronics retailers like Newegg for around $20. Simply plug it into an empty expansion slot in your PC, and Windows will see it and automatically install the driver. After the Firewire card is installed, it will appear as a capture device in the Vegas Capture utility.
I had no problems either using a cheep $15 Firewire card from Newegg on my Gateway Win 7/64 system. Just plugged it in, started my PC, Windows installed the drivers, and there it was as a video capture device in Vegas. No muss no fuss.
I think the main issue is that *ALL* USB video capture devices are geared toward the 'toy' end of the market. There aren't any that capture a decent image or make a standard-compliant file. A large part of this is because they were pioneered at a time when USB 2.0 wasn't yet available, so they were limited to 11Mbps bandwidth, and also because the cheaper chipsets weren't powerful enough to do good processing and encoding in real-time.
By the time USB 2.0 was common and more powerful chipsets were available for reasonable prices, no one wanted to bother with USB video because it had been relegated to the junk heap of cheap scummy video. Therefore no one ever bothered making any decent equipment for it.
All that being said, undoubtedly your device came with some software to capture video. Use that program, save the file, and then edit that result in Vegas if you wish. However, don't expect anything good out of it. Real-time MPEG encoding tends to be both very poor quality and very lossy, especially with cheap low-end equipment, which is a recipe for exceptionally poor images.
Way back when I have used the Canopus ADVC 100 to capture analog video from VCRs... via firewire with excellent results. Later versions than 100 supported timebase correction. Canopus is now Grass Valley and has expanded the line. They can be a $$$$.
Unfortunately the best of the Canopus range, the ADVC-300, is no longer available.
According to Grass Valley the tsunami in Japan destroyed the tooling for the product and it was decided it wasn't viable to pay for new tooling. AFAIK there's no single box on the market today that replaces it. The significant difference with the ADVC-300 is it has a time base corrector.
The alternative to the ADVC-300 is an AV Toolbox AVT-8710 Multi-Standard Full-Frame Time Base Corrector and a Grass Valley (Canopus) ADVC55 Firewire Compact Analog / Digital Converter. Together, they can be had for $387.65 plus shipping from B&H Photo. When it was available, the ADVC-300 had a retail price of $599.