If you have a firewire port on the camcorder, you need to use a firewire cable and connect to a firewire port on the PC. If there isn't one on the computer at the moment, firewire cards come pretty cheap.
Any compression will have to take place in the computer, not the camcorder. Some edit software will capture in mpeg, but not sure if Moviemaker - the free one with XP - will.
Saving raw film back to DVD is not a good idea, edit it first. That for a start will reduce the amount of film you are saving.
If the computer does not have the space to do all of it at once, do some at a time. 58 mins of film will fit on a single layer DVD at best quality, but it's unlikely 58 mins of 'as it was filmed' video will get watched very often. They'd be better off with 10 - 15 mins of highlights and a decent soundtrack, even if it's just some 'mood' music.
If they have a DVD burner, then they should have software, which might, depending on how old it is, convert .avi files to the sort needed for DVDs and offer some menu capability.
For the future, record any new film in SP, not LP. You might need more tapes, but you get better results.
Win XP, Athlon 1.8, G force 3 T, 1 60gig drive + 1 250 gig, Pinnacle Studio 9 plus mostly, Premiere 6, and Vegas 5 sometimes, Soundforge, Cool Edit.