What you are trying to do is called "pass-through," a feature whereby live video (or video from any source, like a VCR) is sent through the camera to the computer without being recorded to tape first. Some, but not all, DV camcorders have this feature. For those that don't, you have to record to tape first, which doubles the time it takes to capture and takes most of the fun out of the process.

So, you need to find out if your camcorder supports "pass-through." If it does, you then have to figure out how to enable it. By default, it is NOT enabled on most camcorders. This is because the camcorder can also pass-through in the other direction (from the computer back out to the monitor) and this is usually considered to be the preferred mode. For instance, this is how you view live video from the Vegas timeline on an external TV monitor (one of Vegas' most important features).

To enable the pass-through feature so it operates from your VCR INTO your computer, you need to look at the menus in your camcorder. There you will find something like "DV-IN" or some similar verbiage. Simply change this from On to Off, or In to Out, or whatever, and you should be good to go.