You can burn store bought DVD's but it is a little tough. Most Hollywood DVD's are dual layer (10 GB) It sounds like your burner handles single layer DVD's (4.6 GB).
I use a program called dvdshrink. I will rip the movie. I can only burn single layer dvd's, so I don't include the extra features.
After ripping the dvd, I burn it with Nero.
It is complicated, until you get the hang of it.
www.dvdshrink.info You can download dvdshrink from this site and read through the guides. They screen shots step by step to use thier program and how to burn the dvd with nero.
www.videohelp.com has a ton of information on dvd converting and burning.
Google would also help you out.
BTW, this is only for making a personal backup of a movie that you have bought. Otherwise it is illegal. :angel
I just reread your post about VHS. There are some products that allow you to hook up a vcr/camcorder to your computer so that you can burn to dvd. HP makes one. I have never done that, but I have seen it done. Converting from VHS to DVD will not improve the quality of the video. So, if it is a Hollywood movie, go rent it (I mean buy it.) If it is a homevideo, go for it. Tapes can break, it would be nice to have a backup. Plus, you can make copies to send it to family and friends.
Goodluck!