I presume you mean DVD recorder as there is no way to loop through a play only machine. I assume this extra signal path is to stabilise the VHS video timebase. Best would be to pass the VHS signal through a timebase corrector which will do a much better job of stabilising the signal.
I also presume you are going composite video and analog audio into the Decklink. If Component video is available, that would be cleaner than composite. Try going straight into the Decklink from the VHS to see if it is neccesary to loop through the DVD recorder. It may look better so I would trouble myself to test it. Don’t record the VHS to DVD just loop through, otherwise you are transcoding to mpeg2 and that will cost quality.
In FCP capture the footage as SD ProRes to get the best quality to file size. Also it is an editing codec.