OK, I have come across this error message once before with a customer who purchased an EzCAP.
It was a driver conflict. He was into making music and had a couple of things he plugged into his usb port. He did not want to disable/remove any usb drivers so he tried the audio to line in method and it cured it for him. (he did not have an audio problem, he had exactly the same problem as yours. Could capture but came back with "invalid file" message)
I would try the following...
Go into device manager and disable all other usb drivers, reboot the pc and see if it works.
If it does not, I would go back in and delete them. rebbot the pc and try again. If it works, reinstall all other required usb drivers one at a time and try arcsoft after each install.
Purchase a phono to 3mm jack and insert into "line in" on your sound card.
"3.5mm Stereo Jack to 2 x RCA" adaptor. You can get them for 61p inc delivery on Amazon
http://www.amazon.co.uk/WE11130-Adaptor-3-5mm-stereo-sockets/dp/B000L9C3GY/ref=sr_1_5?ie=UTF8&s=electronics&qid=1271193386&sr=8-5Take the 2 audio outs from your games console/vhs player and insert into the adaptor. Insert the adaptor into the "line In" input at the back of your pc on the sound card. This leaves just the yellow video lead going from the games console/vhs player into the ezcap.
Change the audio settings in Arcsoft from "usb audio device" to "line in"