Ok, I didnt do my research and I'm stuck with this pos. Dont get me wrong its ok for watching tv in a small window and for laptops but the capturing is not great and the ATI software is junk. The audio is out of sync with the video with every compression I try. Worst of all, most capturing programs like virtual dub dont have audio.
Well I dont come here to complain, I want to help other people that have this and want to use virtual dub (with audio). The solution is very simple but maybe not so obvious. Simply take your RCA audio inputs (if from cable, plug coax into vcr and use RCA outputs from VCR) and plug into the headphone adapter that comes in the box. Now, instead of plugging this into the external tuner, just plug it into the mic or line in of your soundcard. You'll notice that the sound is much better now and you can use it with any program you want. To my pleasant surprize, virtual dub has a nice feature that keeps audio in sync with video, so now at least I have some capture capability. Too bad it only works at 320x240!(Trying to figure out how to get by this one...don't know if its possible).
Hope this helps someone. If you have any questions just ask.