Just a guess, but I'm wondering if the S-Video connection automatically cuts off the other one. Did you try regular composite == the yellow, red, and white == without the S-Video? If that works, then you've found your problem and will have to do it that way or find another way to get the audio in.
I am connecting an analog camcorder to a digial trying to convert and record to my PC. The analog is connected to the digical camcorder via S-Video for the video. For the audio, the digital camera came with a 3 prong to 1 connection (i.e. red, yellow and white merge into one conection to go into the digital camera).
I have the sound jacks connected to the analog camera with the video jack unplugged and s-video conecting the 2 cameras together. I have the digital camera connected to the PC via firewire.
I can record the video fine, but no sound gets recorded. Help!

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