That card will work very well for video capture. Get the WinTV 401, and use
AVI_IO for the capture software. The registered version is probably the best $25 I ever spent. For rendering, I would recomend
VirtualDub. It also has capture ability, but AVI_IO has the ability to timer record and seems to hold audio synch a little better. For capturing, motion jpeg is a good format with
this being the version I recomend. If your system has fast enough drives, and enough space, you can go with
Huffyuv. It's a virtualy lossless compression system but takes about 9 megs per second sustained writes. The WinTV 401 costs around $100, AVI_IO is $25, VirtualDub is free, and the picvideo mjpeg codec is $18. This is within your limit, and would be highly versatile. There are other free software programs that can render to mpeg2 if you need that. VirtualDub cant output that.
Here is a clip of something I did with the software I mentioned. It's a little less than four megs done in mpeg4v2. My card is a Matrox G450eTV, but it will look the same as the Hauppage with this software. Good luck and happy capturing.
Prospero