What you gonna do is:
1.Capture from VCR to hard disk
2.Edit
3.Convert to widely used format
4.Burn CD
Ad 1.
You need the graphic card with audio/video input
I don't know what about your card, but as far as I know the best (to keep things in the limited budget) one is a bit old Matrox card.
Second hand Rainbow Runner, Matrox G200, G400 or Marvel can be bought for a small amount of money.
To achieve the best quality during capture you need a lossless codec like Huffyuv
http://www.divx-digest.com/software/huffyuv.html
Also you need a soft for capturing.
The best one is called AVI_IO
http://www.nct.ch/multimedia/avi_io/
It is shareware but it is worth its price.
Anyway, shareware limitations probably donesn't hurt you in any way-so you can use it in such version.
Also the great soft with capture possibilities is VirtualDub mentioned below.
Ad 2.
Probably you want to improve quality, "kill" noises, cut some parts etc.
There are many video editors but the great one and free is VirtualDub:
http://www.virtualdub.org/
Also the good idea is follow links there to download additional plugins
Ad 3.
Such video file needs to be converted to have it in widely known video standard.
Don't even bother to use the newest, fast changing codec-probably you will have a problem to run it after few years.
So you gotta stick with mpg.
The best converter for such purposes is TMPGEnc
http://www.tmpgenc.com/
Ad 4.
It seems to be well known issue so I only can suggest a Nero for burning
But it doesn't matter which is a program you fell comfortable with.
Anyway-whatever you do, try to read few tutorials before you start.
The good place for it can be found here:
http://www.doom9.org/
Good Luck
Video Recording?
