It's not just software. If the camera's really analog, then you gotta have a capture card or some equivalent to convert the analog audio & video to some sort of digital form, and THEN you need a video editing package with a built-in CODEC (Coder/Decoder) to compress it down to the final format. WMV9 works pretty well for low rates of motion, and it compresses down farther than some of the 'better' CODECs that are intended for more action in the frame. I'm pretty sure it's a freebie from Microsoft (check their download site).
By far, the best guide to "what do I need, and how do I do it?" is at:
http://www.videohelp.com/
You'll want to check the sections on CAPTURE and CONVERT. There's a lot of helpful comments from *real* users there, not just advertising mumbo-jumbo.
The cheapest route for the software side is VirtualDUB, as it's free and it works.
http://www.virtualdub.com/ The only rub is that VirtualDUB only works with VFW (Video For Windows) capture setups, which is ancient tech but is better suited for your older analog camcorder. Of all the capture cards and such, the Hauppage they recommend is the ONLY one I ever toyed with that kept the video in sync with the audio after 10 minutes of play... the rest all drifted eventually due to errors in sampling clocks.
VirtualDUB isn't a full-blown video edit package, but it'll handle converting your chunks of tape into computer videos.
Jumping into video isn't the easiest thing to do, but the info at VideoHelp is pretty good. I still refer back there frequently.
