I have previously used VideoStudio 6 and DVD Workshop 1.3 and in these, it's possible to select "User Defined" settings under the "Capture settings" -->"Mpeg settings". I have used this to capture using i-frames only, setting higher video and audio bitrates than those in the presets, etc. However, I am unable to use any custom settings on Mpeg-2 capturing in MovieFactory 2. There is just a list of presets in the drop-down box, but no "User Defined 1" and "User Defined 2" like in Videostudio and DVD Workshop.
Has anyone been able to use custom presets in Moviefactory 2?

From what the help file says, it should be possible:

"Special settings
Select one of the User Defined settings to customize the MPEG capture or select from the list provided for convenient and coordinated settings. You are encouraged to use the NTSC VCD and the PAL VCD settings for creating Whitebook compliant MPEG-1 files for use on VCDs."