You will need to capture video at 720 * 576 Resolution in order to get
DVD Quality -- and your system should be capable of doing it *if* you don't use a Hardware Encoder.
Your system will do Real-time 720 * 576 Capturing using Windows Movie Maker 2 (Software Encoding) however that's WMV9 -- not MPEG2.
Hardware Encoders can real-time capture:
Format: PAL/SECAM
Compression: DVD-Quality MPEG-2 and VCD Quality MPEG-1
Maximum resolution: 720 x 576
Maximum frame rate: 25 frames/50 fields per second
Can you please link us to a All-In-Wonder TC Card you are thinking of buying? (I had no luck googling for it).
Cheers,
McoreD