What you are seeing is a full screen preview on your computer monitor, but the television screen won't show that as it cuts it off. The monitor uses a display process called Overscan, where you see the entire picture but televisions use Underscan, where the top, bottom and sides are 'cut off' from view. So don't worry about any lines you see at the bottom of the picture. Composite and S-Video signals are completely different, basically in a composite signal all the picture elements are bundled in together but in an S-Video signal the Chrominance (colour part of the signal) and Luminance (light and dark parts of the signal) are handled separately which gives a much higher picture quality. What are you capturing your video from, is it an analogue camcorder or VCR? USB won't give as high picture quality compared to using a digital camcorder and Firewire.
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