I've had a quick look at the video capturing device and it only has Composite and S-Video inputs which means the quality will never be great and after checking out the video links that can clearly bee seen. However I can see that your friends clips is slightly better.
Make sure you use the 4 pin S-Video connection. Dont use the yellow Composite connection to capture the video as it's rubbish in comparison. I'm betting your mate is using the S-Video connection to capture the clips which is why his clip is better.
The above has nothing to do with the available resources on your computer because once the signal is digitised by the Dazzle DVC 100, and is in the digital domain, the applications you use won't introduce any noise/artefacts due to the high bit rates the app's engines work at giving theoretically high S/N ratios.
Sorry, I went on a bit there. But yea try using the S-video connection, not the composite connection.
With regards to the computer I feel that CPU and RAM upgrade might improve things a little but to properly improve rendering times you really need to upgrade and using DDR3 RAM with the latest architecture CPU's will enable a little more productivity and provide a better platform for the software to properly utilise.