Sorry for the long delay, I figured out that the black overlay had to do with the aero themes being disabled, so I do my best now to make sure that other programs aren't running alongside the capture software, thanks MrDerpski.
Now about those color distortions, here is a video that shows them on YouTube. The video should start playing a few seconds before them, and in this instance they're only around for a second or two so be sure not to miss them.
Now, before you say anything about this being PC game footage, I know for a fact that it happens in PS3 footage for me as well. In fact, at this point, it's a whole lot worse when recording console footage. For some reason, a few weeks ago it was about non-existent when I swapped out my Roxio USB cable for a brand new Amazon Basics one. Now, I swapped out my external hard drive's USB cable for perhaps a slight downgrade, BUT when recording to my HP laptop's internal HDD, the same problem occurs, if not even worse! Now, it gets to the point where the audio too is breaking and stuttering. My laptop exceeds the requirements and even recommendations, so I find it hard to believe it is my laptop. I have not been able to test the theory with my desktop because, as with another topic I posted about, the thing will not work no matter how many times I install and uninstall drivers and software following the procedure word for word. Others too have had this issue, but the issue in this topic, I have not seen described to this extent.
All of my hardware and cables connected to the Roxio are top of the line, I even found a way to record the PS3 game footage via HDMI 1080p WITHOUT ILLEGALLY BYPASSING HDCP. I still use component cables from the PS3. And again, before you say that that is the issue, the solution worked amazing for the first few weeks then along with the PC recording, it got much much worse than how it was at the time of the original post.
Again, if there is some sort of solution besides uninstalling and installing, blah blah blah, I would love to hear it because I have done that I don't even know how many times and the Roxio software is really making me mad. The hardware is fantastic, and the software just holds it back at every chance it gets.
Thanks in advance.