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I've just been reading other posts on this forum about USB capture and according to one post it says in the Sony camcorder manual that if capturing via USB with Windows 98 (first edition) you wil get no sound. Later versions will give sound via USB.
Firewire is the ONLY way to go for video capture. It will give you full quality capture of sound & video, but USB will be very low quality. Firewire can also control the camcorder via the PC so you only need to be useing controls on the PC. A laptop firewire card with a cable included should cost you less than £50. Captured footage will take approx 1Gb of space for every 4 minutes captured, so you will need plenty of spare space.
Never used it, but many on here have said that the Sony software supplied with a camcorder is not worth it, and with many cheap options available you might as well get something that does a good job. As I said MS MM2 is a great free prog, and many costing only £20-30 are available if you don't have Win XP.
Mark.
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