I know exactly what your problem is.
Newer DVD drives transfer all the video and audio via software (the data channel on the drive). Older drives send the audio straight to the audio card/circuits through a cable. And they send the video to the video card directly.
The card renders everything on screen but the video, and then gets the DVD stream from the frive, instead of from the software, and overlays it where it is supposed to go.
Which is exactly why you can't capture the video. It's being combined with the rest of the GUI via hardware, not software. Therefore, software can't capture it, only hardware can (like if you hooked the S-video connector up to a capture box or something like that).