Assuming you are connecting the VCR to the computer through the USB video converter - in the program check you have the USB device selected as the video source - you currently have the web cam selected.
Assuming you are using the Magix converter, try installing the correct drivers for the USB converter available here, You will have to login with the email address and password you registered the software with.
If you are not using a Magix USB converter then you need to download and install the latest drivers for the device you are using.
Thanks again John. I'm very frustrated now because I have downloaded & installed and reinstalled the driver "video wandler 2" (red and white). I still get no choice other than "HP Webcam 101 (USB-dshow)" and "Cyber webcam" !!!!! This is a HP laptop using Windows 7 Home Premium Service Pack 1.
I even went to my older computer to try it on Vista Home Premium 64bit Servicew Pack 2. It behaves exactly the same way !!!!!!!! I am ready to take a hammer to this little red and white box Serial 23127019733.
I have spent 50 hours on this and the program works if I input from a computer video file! .... But I have VCR tapes I want to convert.
If you decide to purchase a new device there are many on the market that will work with Magix software, however do avoid the cheaper end of the market, in particular those that use the computers audio card to do the audio conversion.