This works best on Windows XP, the device driver available is 32 bit only. There is no 64 bit device driver available.
Windows XP (will not!) enable the Audio subsystem for a USB Audio device unless you have a Sound Card installed.. even if you don't use that Sound Card. It has something to do with not loading the Windows Mixer service.
The Effect is being able to capture Video but with no Audio. That is you can capture video, but there will be no audio stream.
VirtualDub "seems" to be able to capture video and audio even if there is no Sound Card.. but its a heavy work around. The only test I made was to turn on the Volume Meter and see that it could detect audio input from the video capture device.
For PowerDirector 10, I had to actually install a Sound Card (Santa Cruz) and the Windows Mixer service was installed and started. Then in PowerDirector, I had to (and could) select the Video capture device as the Sound source. Its a strange sort of dependency.. but it works. Then I could capture 4:2:2 AVI or 4:2:0 "Software" MPEG2 video with sound.
Per usual playback on Windows 7 in the Windows Media Player required changing the file extension from the default .mpg to mpv2, then the video would playback in Windows Media Player, or in the Windows Explorer Preview Pane.. which made surfing videos without loading up a heavy playback viewer far easier. Trying to play the default .mpg file produces an error that the file type is not supported. I think it looks for the four CCCC inside the file to figure out the contents, or looks at the file extension for a hint as to the contents. And it defaults to not trying for plain .mpg files.. at least the ones produced by PowerDirector.. and many other capture software.
The ATI USB2.0N TV Wonder device produced good capture video.. but is Very sensitive to the quality of the external Power Brick used to provide power. If the Power Brick is getting old, banged about or is in anyway damaged. The Video captured can have a series of Diagonal lines seemingly ghosted or overlayed "Superimposed?" upon the overall image. They produce alternating lines of dark and light over the underlying image. -- This can be cured completely by switching to a new or "known to be fresh or good" Power Brick. The problem goes completely away.
I used to wonder if this was random interference or bad cables.. but it was simply a bad or failing power supply. These power supplies, even the wall adapters.. have capacitors in them that dry out and go bad.. before they completely fail.. or make the video capture device fail.. they begin producing low frequency interference probably through the shared ground connection with the video capture board in the device. There isn't really a practical way of shielding from the interference since it is a shared ground.. a filter of some sort might work.. but its an indicator the Power Brick is nearing its end of life.. and could further damage the video capture device anyway.. its best to simply get a new one.
Since most of the ATI USB2.0N TV Wonder video capture devices are over ten years old.. it makes sense that most of the Power Bricks are near end of life anyway and will be introducing interference to the video capture image.
The Power Bricks are generic enough and available from places like Digikey under the Phong brand name.
I have seen similar things with PCI video capture cards and now suspect the Electrolytic caps surface mounted to the board. They are intended to filter out low frequency noise.. but when they dry out they stop doing that and permit more low frequency noise to invade the video inputs and super impose upon the video capture raster.
Since most of the NTSC signal is based upon or synchronized with the 60 Hz line frequency (a low frequency source of interference) it makes sense that the inputs are not as well protected after the capacitors begin to fail.