You need a good quality capture card if you want to do a good job. ATI and the like include capture as an afterthought or extra feature. It is usually rather washed out and fuzzy compared to cards made by Pinnacle. So if you are really serious, a Pinnacle DV500 would be a great card for the job.
To get by the 2 or 4 gig limit you can capture with
VirtualDub which is a freeware video capture/conversin utilitity. It has the ability to cut over to a new file when the current file you are capturing to reaches a specified size.
Once you have all of your video captured, you can line the separate files up one after another in video editing software and export to MPEG if it's supported, or open the first one then "append" the rest in VirtualDub and use it's frameserver feature to encode it in any stand-alone mpeg encoder like
Tmpeg (which is really the best out right now).
Working with digital video gets complicated, this is just a very simple overview. I also have to agree that VCD is NOT a high quality format. SVCD is less supported by stand alone DVD players and with the fact that it only holds about 40 minutes of video makes it an unattractive option. These days many people are using
DivX AVI files for digital copies of their stuff. It's quality and compression are great. My only concern is that it is a somewhat proprietary format (seeing that it is an AVI CODEC) and may not be playable 2 or 3 generations (windows versions and X86 CPUs) into the future unless development continues.