I am not expert, but have been doing:
1. Capture to HD using Firewire with FULL AV Quality. (I use Pinnacle Studio
. DO NOT USE MPEG Quality. While I think your XP2500+ is good enough, you may still have to worry about your HD speed (do you have 7200rpm drive or a RAID 0 setup?) You should get a AVI file that is approximately 13GB.
1.5 Defrag your HD might be a good idea. Pinnacle's capture program tells me how many frames is drop. If you leave your computer alone and defrag your HD (with a good 7200rpm drive), you should not have any drop frames.
2. Author using software.
3. Encode using highest bitrate that the software will allow you to fit all the DV into 1 disc. I normally encode the DVD Content just to HD first. Then use PowerDVD to check before burning.
4. Burn it onto DVD using Nero and the like....
5. If you are short on HD space..... well I suggest you just go get an extra HD... it is cheap these days.
Hope that helps....