Your computer setup doesn't seem to be the problem, I would suggest you check to see when you last defragmented your hard disk. I take it you are using Firewire to connect your camcorder to your computer and not USB? And finally try changing the settings around in PAL 4x3 low quality 3MB VBR 2 Pass - change to high quality 6Mb or 7Mb CBR and see if the software will still let you burn to DVD - you'll know if it the settings are too high as the BURN button will be greyed out, if it is reduce some of the settings and see if the BURN button becomes available again. If you can get away with using high quality 7Mb CBR then use it.
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Better than a poke in the eye with a pointy stick any day...
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