it seems as if you are going to have to spend some money, no matter how you look at it.
for a HDD, you will need plenty of space, as you already learned. DV footage takes up approx. 13GB per hour. while editing, you will need more room for temp and finished files. I would recommend 200GB or more. luckily, HDD storage is very cheap these days. check the hot deals section for, er, some hot deals.
timewise, it will depend on how much you are doing, and how powerful your computer is. when you capture from a camcorder, it is in real time, so 40 minutes of movie will take 40 minutes to capture. then all the editing, transcoding, etc. figure on a few hours per hour of original movie you are working with.
if you can spend a bit more than what a cheap HDD is, and want simplicity, a stand alone set top DVD recorder should work. they can be had for as little as $100, and up to alot more. even the cheap ones have mini firewire in, perfect for your camcorder. you could also use the composite cables that you hook up the camcorder to a TV with, but there will be a loss of quality. this recording is also done in realtime, plus a few extra minutes to finish the DVD in the recorder. it really is about the most trouble free way to do this, but you have less options as to what you can do to the video (titles, transitions, etc.). do some research of reviews and user experiences with them before you buy.
videohelp.com has good info, as well as some guides for you.
-Cambo