Sorry for the double post...
Update: I tried recording directly to a DVD and upon stopping the recording it immediately throws the same exception error. This seems to imply that the ‘VCGProxyFileManagerVHS.exe’ is used when burning the file system on a DVD.
I also have now installed this to a second PC that is running WinXP SP2. It installed and runs perfectly on this PC even though this PC is barely above the minimum hardware requirements!?! Now that I can see how the app performs on this PC I better understand how much it is struggling on the higher end PC, everything (loading the app, access the video signal, etc) takes 2-3 times longer on the higher end PC.
One large difference is that I have a large amount of multimedia codec’s, drivers, apps on the higher end PC and am now thinking that this is causing the jerky captures (specifically the sound codecs). Has anyone had issues with certain sound codecs?