That system should be fine.
You could capture MPEG-2 with MPEG-2 hardware, on a Pentium III system. It was slow to edit or otherwise work with, but you could capture it, because it was fully offloaded onto dedicated hardware. Not that many cards from that era were very good.
When ATI released the hybrid hardware/software All-In-Wonder Radeon cards, Pentium 4 1.5Ghz systems were really the minimum for that to work well. I did it with a P4 1.8Ghz for a few years, and it was usually fine. Celeron and AMD systems in the same Ghz range did not fair as well. Software-only MPEG capture programs were terrible.
By the time you got to around 2.0Ghz, there were no issue with the ATI hybrid methods -- no risk of dropped frames, etc. Software-only methods were better, although still pretty lousy. MainConcept MPEG Encoder v1.4 had a capture utility that worked decently in that timeframe.
It wasn't until the P4 3.0Ghz range that software encoding became viable. However, most of the programs that could capture at MPEG-2 were still awful. In more recent times, Matrox and a few others have released VFW and/or WDM MPEG-2 codecs, for use in third-party programs (
VirtualDub, for example) and those have worked alright.
Your ~2.2Ghz AMD Athlon system fits well within the "safe" range for ATI AIW Radeon cards, like that 9000 card. There's really nothing to upgrade, aside from having two hard drives -- one for Windows/programs/data, and one for video file that you'll be capturing. Maybe pushing it to 1GB total RAM wouldn't hurt, but that'll mostly come in useful for other areas, and not the capturing.
You'll want to use ATI MMC for capturing AVI and/or MPEG-2. And then be sure to read the ATI MMC capture guides:
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Capture AVI with an ATI All-In-Wonder card
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Capture MPEG with an ATI All-In-Wonder card
Not a bad system system for capturing.