I actually do a lot of video editing and as someone mentioned before, get a separate capture card. I use the ATI TV-Wonder. Great for the price. If you've got a huge budget, go with a Pinnacle card, they're usually of higher quality. The more expensive Pinnacle cards have both s-video, audio, Firewire, some even component capture so you can capture high resolution widescreen video if you'd like. Of course, if you're just doing home videos, a good VCR and a TV-Wonder will do you good.
More importantly, the SCSI setup. With RAM being limited your HD speed is almost critical. Of course, more RAM helps, but ultimately, when messing with GB of files, a stable system (WinXP/Win2k) would be recommended and the newer WDM capture drivers for the TV-Wonder along with a dedicated capture program like the one included in VirtualDub (for quality, don't use ATI's software) will do wonders.
www.vcdhelp.com covers more on the capture part. Also, a faster processor. I know you already have an AthlonXP, but an extra 100MHz could mean the difference between 8 hours and 7. Despite what you may hear, video encoding is still very much processor limited.
As for the video card, it really doesn't matter. With a dedicated capture card you can get anything from an ATI Rage to a Geforce 3 Ti 500 and it really wouldn't affect your capture at all (unless you want hardware assisted Mpeg2 playback, then get the Radeon 8500). Mpeg2 decoder cards are outdated and with the hardware acceleration already available on modern video cards, you don't need it. Also, a SB Audigy. I recommend this not because of any specific features but simply because the drivers are improved and its more compatible with the win2k/XP OS's (or so I hear from the reviews). I've heard horror stories about the Acoustic Edge and its drivers and have personally experienced the horror of the Live! drivers.
I'd suggest you go with SCSI instead of an IDE RAID setup simply because IDE takes up more CPU and overall system resources (not to mention insane access times) and in work like this, you need all the system resources you can get. Not to mention IDE devices can't be accessed simultaneously (per channel) so if you're waiting for your video to finish and would like to change a few desktop settings or move some files around on another drive, tough luck. That leads me to another thing, separate drives. One drive for the system to run on (Windows to boot from) and the other drive to put all your data and do your work on (temporary DIR's to capture video to and store video from, etc.) I'd suggest at least a U160 controller (make it Adaptec for compatibility reasons) and 2x10k rpm drives, one can be 18GB for the system to run off while the other should be at least 30GB.
Plextor's CDRW is a great drive, but if you want to run high resolution, high quality video (not going to get much from home VHS anyway, but still), get yourself a DVD+RW. Phillips makes this great one. As for the DVD drive. Lite-On makes this great 16x drive. I don't know how it matters if you're not planning on ripping DVD's.
Is this a dedicated system just for video encoding or are you planning on doing other things as well?