DMR-ES10, AIW 600 USB capture issue?
 

I'm trying to adjust my levels in VirtualDub and running into something weird with the histogram.

Here's my capture chain:

JVC HR-3900U S-video>Panasonic DMR-ES10 S-video>ATI TV Wonder 600 USB>VirtualDub.

I've found advice here and elsewhere that the sharpness should be adjusted down from the default of 2 to 0, and this does improve the capture quality to my eyes. However, whenever I set sharpness to 0 with the DMR-ES10 in the chain, I get weird notches in my histogram (see pic).

I also have a similar issue when adjusting the contrast with the DMR-ES10 in the chain. If I leave the sharpness at 2 and adjust the contrast upward, I get a similar notch effect in the histogram. If I leave the sharpness at 2 and adjust the contrast downward, I get kind of the opposite effect in the histogram with little spikes on top (see pic).

This happens on every tape I've tried, commercial or otherwise.

Is this something to worry about? The captures actually look great to me, but I'm a novice so any input is appreciated.

Any general tips on adjusting the levels is appreciated as well, as I'm trying to avoid the reds in the histogram at the top end through brightness adjustment and also make the blue as wide as possible via contrast adjustment.

Here are the images inline (sorry, didn't know how to do this last time around).

Notches when adjusting sharpness down from 2 (default) to 0:

Attachment 16202

Spikes when leaving sharpness at 2 and adjusting contrast downward:

Attachment 16201