my guess in this case it maybe both hardware and software. I might also add that premiere element won't do you much good here. Have you thought of getting a dvd recorder? The price are certainly dropping down to where even I can afford it now.
I purchased, with my computer, software and hardware called "Dazzle Digital Video Creator 80". The software is "Pinnacle Studio Quickstart for Video Editing". The hardware allows you to connect a VCR to the computer, and capture your video. When that is done the video can be edited and then burned to a DVD. The problem is the quality is poor. I now realize that the capture resolution is only 320 X 240 pixels. Pinnacle says I can upgrade to "Dazzle 90" which has a higher capture resolution. Adobe says it is the software that determines the capture resolution, not the hardware, and if I buy "Premiere Elements" I will get better quality. Any opinions?