video capture with theater 650

[bratsantom]

I am capturing Hi8 video with my theater 650 and I am having some problems.

First it is annoying that the theater 650 has not capture settings. What this means for me is that a 120 minute Hi8 video is captured in 2 4GB mpeg files. This is not that big of a problem but the strange thing is that the first file plays and seeks fine and is recognized by TMPGenc. The second file however plays in windows media player but does not allow you to seek and TMPGenc and any other video editing program does not recognize it as an MPG file. What is the problem? Is the second file always incomplete or corrupt or something? I have captured 6 videos and it is always this case.
Well if I can solve that first problem and get the second halves to be accepted by encoding programs what would be the best way to make a 120 minute Hi8 at least fit on one DVD as in 4GB instead of 8GB. I would like it to be even smaller if possible. I mean the theater 650 captures it at 720X480 I think and that is just too high quality for such a low quality input. What could be done?
Any help greatly appreciated as I do not know much about this stuff.
thanks