I have been using the Digital VCR for over 6 months now, and it's quality is sufficient although not stellar - I haven't tried connecting it to a TV, but from my experience it's quality will probably be on par with VHS when viewed on a TV, under its maximum encoding.
It does have some problems - Most notably occasional crashes and the lack of an EPG.
It is perfectly suitable and does its job well, and I have enjoyed it immensly.
I actually have an EPIA-M6000 on order at the moment, and although it is intended to replace my fileserver, I might try dropping XP & the DVCR on it just to see how it handles it, as I am considering the feasibility of putting together an HTPC based on the EPIA-M.
There is one last thing you should be aware of about the DVCR - It is currently only compatible with Creative's own software. There is some work going on to create a more universal API for it - look under the forums at www.x-epg.net
for that, but its directshow filters and export capabilities are not up to par.
BTW, I am currently looking (waiting?) for a USB 2.0 capture device, the specs for Emuzed
's Bali USB PVR seem very interesting - But it is currently unavailable as far as I can tell.
Let me know if you have some more specific questions,
P.S. A link for creative's product page for the DVCR is this one
EDIT: Miswrote x-epg's website - Fixed now.