Simple video editing is part of Windows XP, from SP2 onwards.
Along the lines of Oilandgasman's recommendations, you might find it easier to get a USB-based video capture box with bundled software, capturing to hard drive rather than DVD (DVD small, HD big), using the bundled software to create your final DVDs. The capture box plus "lite" version of the software tends to be about the same price as the "full" version of the software.
Note, .vob is only mpeg2 in disguise: even software that doesn't recognise .vob may work OK if the .vob is renamed.
I use VideoReDo for messing with mpeg2 files, but it's not right for everyone. It's great for fixing up the mpeg2 disasters that I pull off a Humax box.