I have used USB capture some time ago with the cheesy software that came with it for VHS capture ( Ulead ). Normaly the capture software will default to AVI and some have MP2 options. 720×576 ( PAL in my instance ) seems to what it captures at. Drop that into Vegas making sure you use the Detect Media tab to get any interlace correct, etc.
As the others have said, can’t beat Firewire for the best capture but is do-able….
John