ATI AIW 9200 = 2004 in computer terms that's old

After going through the troubleshooting steps I am still in the same spot.

No matter what combination of options I try my system slows whenever horizontal video output is set to 720 on the XP machine. I can confirm that I have no issues capturing 720x480 from the same source on my Windows 7 PC using the ATI 600 USB. At this point I might just need to settle with a max video output size of 704x480 when I'm using the XP PC.

My current working theory is that this issue is being caused by a hardware bottleneck. I'll report back if anything changes.

That's just complete nonsense. It's a high-quality SD capture card that outperforms many modern/current professional cards like Blackmagic.

Video shares a lot of traits with cameras. I'll put my 2009 (decade old!) D3s against a new cell phone any day of the week. I'll stack it against many dSLRs as well, and mop the floor with them. Heck, some of my old film cameras can make many modern cams look like a POS with the right film and lighting. Its all about the quality of the tool, and knowing how to use it for best results.

Age does not equate quality.

Many commercial DVDs are produced at 704x480, although 720 width is recommended for 16:9 DVD. But it's not much of a stretch from 704 to 720.

Some installations just have bottlenecks that are difficult to pinpoint. Don't feel alone. Many have gone over to AmarecTV for lossless capture with huffYUV. It's free and their not-free lossy proprietary codec isn't needed for lossless capture, so you don't have to ante up for it. https://www.videohelp.com/software/AmaRecTV