I am having the exact same issue. The strange part is that it just started happening. I actually was able to convert several Hi8 tapes and I don't recall having any distortion issues like this. Now, all of the sudden I have constant wavy lines at the top of the captured video which are not showing up on the LCD monitor screen on the camcorder. I just don't understand why it was working fine for about 10 tapes and then all of the sudden started having issues? The connections/cords are all the same. The camcorder is the same. I've actually kept the WIFI off the laptop I've been using to avoid any updates or interference so no new software should have been installed.
I went back and looked at some of the historical postings on this site and have done the following too:
Added a DVD/VCR combo connection between the camcorder and the capture USB device. That did seem to help slightly but the distortion lines are still present in the capture
Tried updating my drivers for the capture USB device. It looks like there are later driver versions but they are not listed on the Roxio support site and I can't get them to apply no matter what I try. However, the original drivers were working fine at one point
Tried repairing and then completely reinstalling the VHS to DVD software
Tried rewinding the tapes just in case there was any slack. I also wondered that the tape age was an issue because they are about 5 years older than the ones I started with... but again the LCD monitor on the camcorder is showing no distortion
This is so frustrating because I probably have another 20 tapes to convert and I have wasted weeks trying to get it to work like it did before.
If anyone has any other recommendations, please help!