Smoothing of dark scene with fading

[VHS_Hunter]

Hi, I would like to smooth and denoise this scene. This is what I tried so far:

1. Capture using an S-Video cable on an S-VHS (HR-S8600EU) with Grabster AV 350 MX. Unfortunately it captures natively in mpeg2 with Magix software (I tried Virtual Dub but the frames were all messed up);
2. Encoding of a shorter avi in Lagarith with Virtual Dub;
3. Filtering in Avisynth, second Lagarith avi encoding.

LWLibavVideoSource("...Intermediate.avi", format="YUV420P8")

Stab(dxmax=0, dymax=2)

function YMask(clip v, int min, int max)
{
Levels(v, min, 1, max, 0, 255, coring=false).GreyScale()
}

original = last
mymask = original.YMask(15,35)
denoised = original.MCTemporalDenoise(settings="medium", chroma=true, stabilize=true)
Overlay(original, denoised, mask=mymask)

RemoveGrain(5).RemoveGrain(5)

I modified the scripts in this thread
https://forum.videohelp.com/threads/393934-McTmporalDenoise-function-question
but I feel I am not making the best use of them, denoising is incomplete. Any help would be appreciated.

[VHS_Hunter]

I tried the method suggested in this post http://forum.doom9.org/showthread.php?p=1493091#post1493091

source=LWLibavVideoSource(".....Intermediate.avi", format="YUV420P8")

#VHS chroma settings can sometimes cause smear. Skip CNR2 if not needed.
chroma=source.Cnr2("oxx",8,16,191,100,255,32,255,false) #VHS
#chroma=source.Cnr2("oxx",8,14,191,75,255,20,255,false) #Laserdisc 

#Use 4 instead of 8 in line below for better quality in shadows
output=MDegrain2i2(chroma,4,0,0)
#stackhorizontal(source,output)
return output


#-------------------------------

function MDegrain2i2(clip source, int "blksize", int "overlap", int "dct")
{
Vshift=0 # 2 lines per bobbed-field per tape generation (PAL); original=2; copy=4 etc
Hshift=0 # determine experimentally 
overlap=default(overlap,0) # overlap value (0 to 4 for blksize=8)
dct=default(dct,0) # use dct=1 for clip with light flicker -- works really well

fields=source.SeparateFields() # separate by fields

super = fields.MSuper(pel=2, sharp=1)
backward_vec2 = super.MAnalyse(isb = true, delta = 2, blksize=blksize, overlap=overlap, dct=dct)
forward_vec2 = super.MAnalyse(isb = false, delta = 2, blksize=blksize, overlap=overlap, dct=dct)
backward_vec4 = super.MAnalyse(isb = true, delta = 4, blksize=blksize, overlap=overlap, dct=dct)
forward_vec4 = super.MAnalyse(isb = false, delta = 4, blksize=blksize, overlap=overlap, dct=dct)

MDegrain2(fields,super, backward_vec2,forward_vec2,backward_vec4,forward_vec4,thSAD=400) 

unsharpmask(60,3,0) #not sure whether to put this before or after the weave. Remove if sharpening degrades video
Weave()
}

I tried to add ColorYUV(source, gain_y=-50, gamma_y=50, off_y=-2) but nothing changed. Should I change luma and add smoothing?