Alright, lot of ground to cover here, so this may seem a bit stilted at time....
When working with black and white video, be sure to use a device that will remove all color from the video stream, it's never good to see a B&W video that has a pink or green tint to it. This can also be done later in software, if needed. Proc amps do it in hardware, between the source player and the digital conversion input.
Sharpening video is something that is honestly only possible in hardware. Software sharpen filters are pretty terrible and don't do much. The more you can process/filter a signal in the analog realm, the better off you are. Of course, these hardware processors cost money, but it's a good investment for anybody serious or with LOTS of videos to do. The VIDICRAFT DETAILER II, III or IV units are 1980s-1990s units, work well, and sell used on eBay
for about $25-75, always a few of them up for auction. The company no longer exists. SignVideo now owns what used to be Vidicraft, and they make the STUDIO 1 DR-1000 or SIGNVIDEO DR-1000 units. These are newer and work a bit better, though run about $100 used (harder to come by) or $300 new from www.signvideo.com
Editing frame by frame is not fun. I do it quite a bit for advanced menu work, taking part of the video, and then decompiling it in, and finally editing the frames in Photoshop, one by one, usually doing special effects.
The problem with frame editing is home sources are usually not frame-by frame. Home video (VHS, tapes, DV, etc) is not progressive, it's interaced. There are no frames to edit. When I do special effect, I have to do an IVTC/deinterlace process to change that interlace into a forced progressive output. There are drawbacks to doing this, but for a menu, it's generally not noticed. You'd likely not want to do this one a large movie, as you'll probably cause more harm than good. Not to mention every 1 second of progressive video is about 24-30 images, so you can have thousand or even millions of images. For cleaning video, it's best to use video filters inside video software. We at home cannot do what Ted Turner did to clean old films, as they had film to scan one frame at a time, videos are not like that.
You can convert MPEG back to uncompressed AVI for editing, but it will not do anything for quality. To improve quality, or rather to make it more transparent to the source, you'll have to go back and re-borrow those tapes and start over.
The U-Matic is not much different than a VCR to me, same type of source. While the quality may be good, it's still on the low/medium resolution side by today's digital standards. Sounds fine. Nothing special need be done really.
ACE is a box I've heard of but never used. A timebase corrector (TBC) removes errors in a video stream, both artificial (like Macrovision and other anti-copy methods) and genuine flaws. The proc amp controls (contrast, color, etc) work decent, but are very minor compared to a full-blown proc amp. Something like an Elite Video BVP-4 or Sign Video PA-100 or Vidicraft Proc Amp will blow it away. So if you want a large control in this area, a full proc amp may be a better solution. If all you need is minor adjustment, the device you have may be fine. In the USA, they AVT-8710 is a TBC with some similar controls. I'm actually in the market myself for a new hardware converter box, but ACE was knocked off my list because it, as I understand it, deinterlaces the video to achieved the framerate conversion. I'm still researching this.
To capture on a computer, all you need is a good capture card and the correct software. Plus a bit of knowledge on how to use it. As far as the Plextor Convert-X box, I've not used one, but I've read and heard plenty about it from users. It's not the best card, and it comes Ulead software that should be okay (VS). It may also depend on which one it is, which model. Using it can also be a headache, as it deinterlaces by default and needs some special things done to make it capture interlaced.
If you did frame by frame, Premiere and Photoshop would be fine for the final stage of work. But to get your frames, it'll take a bit of work. Assembling a 90-second menu, using this method, took me about 8 hours each time, and that's me knowing what to do and working fast at it.
If my e-mail ever bounced, try to send again the next day. While I'm up 99% of the time, somebody is bound to hit that 1% window.
You are in the USA. In fact, I'm in Texas too. From your IP, looks like you're in Austin, I used to live there, some years ago. Wish I could move back. You should have no trouble buying anything I've mentioned so far, and you're on the NTSC video standard here in the USA.
The only thing you can do about a frame counter on the video is (A) ignore it, or (B) cover it up with something. You can always add your own logo/image on top of the counter, but that may be equally obnoxious. You can also mask it (cover it with black), and make the video partially widescreen. This is a restoration method I've used in the past, especially on videos that are really botched full of errors at the top or bottom of the screen. You may "lose" some picture, but it's better than have "more" picture that drives you up the wall.
S-video will do better when working with proc amps, including the minor proc amp controls in your box. Use it if you can, though don't go out of your way. Read this complex little article: http://www.digitalfaq.com/weblog/entry.asp?ENTRY_ID=11
If you have actual film reels, and want it restored and transferred, there are professional houses that do it, though it can be expensive, and many of them have restrictions on content (home movies only, some of them). Dallas, Austin and Houston should each some some places that can do it, though the better ones are out of state.
I also have a Samsung 5000W unit, but on the PAL inputs, it tends to make the image vibrates because the image resizer is not very good. When using it to play tapes, it's usually fine, but could probably be better. That's why, as I mentioned earlier, I'm shopping for a new device to convert. For a VCR, I've got a JVC HR-S7965EK PAL unit.
Your computer sounds fine. Plenty of CPU, RAM and hard drive space. That's good. You'll need it. Soundcard is good, Plextor burner should be fine. I see now that you ahve the 402 Plextor box, I'll have to see what else I can learn about it. Most users seem to be displeased with it, especially the software. The Intervideo WinDVR recording software is terrible, it forcesthe deinterlace MPEG captures, not good. From the sounds of things, it's a complete software-driven MPEG capture. If you're using it ONLY for AVI capture, it is probably fine. Hopefully it works with VirtualDub
The Phillips DVD recorders tend to add grain to video, so you may want to watch for that. I would not use anything more than 2-hour mode, but even then, it has problems with imperfect sources (like yours) that confused the encoder and spits out a lower quality product.
logo-away filter doesn't work. I've seen it work ONE TIME ever, and that was from a nearly-transparent tv station logo, but even then it wasn't perfect. Those logo filters mostly just create a blob on screen that is 100 times more obnoxious than the object you oiginally wanted to remove. I would not zoom in on the video, as you tend to stretch and distort the rest of the image too much.
The Philips records video in DVD+VR format (compliant with DVD-Video), so you must extract the VOBs in IFO mode, not merely copy the VOBs direct. Make sure you've done that. Editing MPEG is also not the greatest, you may want to open VirtualDub (the modded one that can open MPEG video) and then save it as an uncompressed AVI before trying to edit.
Audio sync errors can almost never be fixed. The issue at hand is video information is dropped while audio information is not. And it's random, chaotic, so you'll likely never be able to fix it. Save yourself the hassle and just start over, re-record it. Although it need be noted that audio sync issues are not really possible with DVD recorders, because it's all hardware, so the issue may lie with the software you're using, or codecs, or something else (likely the MPEG format) confused something in the editor.
Ah, kinescopes. I have some conversions I recorded off tv (late night GSN). You need to demux with TMPGENC (goto FILE, then MPEG tools) and split to audio and video. If the audio is not WAV, convert to WAV using Besweet (guides in this forum). Then drop into an audio editor like SOUNDFORGE
I'm not fond of the Adobe Video Collection. As Bart Simpsons might say, it's craptacular. I like Photoshop, I've used it for 10 years now. Adobe Premiere, another solid piece of software. Adobe Encore, a great bit turd of a software, waste of money. Encore is severely limited, and it's a headache to use, and is the most expensive piece in that collection. You also do not "NEED" the "latest and greatest" either. Not much about Photoshop or Premiere has changed in the past few versions. Photoshop 6, 7, 8, CS, CS2 ... all would be fine. Buy one used (and legit) off eBay
for under $100. Premiere 6.5, PRO ... all fine. I use 6.5 to this day, PRO offers nothing I need, though I'm not a super-advanced editor. PRO does have more "stuff" but I'm not sure it's anything you need, I know I don't need it. You can get 6.5 used off eBay for pretty cheap as well. maybe get one through an education discount, just PRO. And then for authoring software, I would say get Ulead DVD Workshop 2. It's has a very easy interface (guides on this site ARE forthcoming in August sometime), but it has very advanced features and can make professional-quality DVDs with no problem. It runs about $500, though it's cheaper on educational discounts (maybe $200-300). That's what I'd suggest. Oh, and for the record, so you know, ELEMENTS version of Adobe software are very limited, the new way of saying "LE" (limited edition). You may not want those, as they essentially take away some of the advanced options and filters.
I took the liberty of searching ebay just now, there are several auctions for Photoshop 6.0, the one I use for all my work, and 7.0, for a meager $50-80 price range. They appear to be legit too, though caveat emptor.
As far as DVD Shrink copying discs, it's not really ment to copy homemade discs off a DVD recorder. To copy those discs, do ISO mode on DVD Decrypter
Whew ... I'm beat ... that's a lot of info.