Yah, it's those blanket statements that'll get one in trouble (don't I know!
). You remember all of the GPU requirement discussions that we've had since S10 was released, I'm sure...e.g. "what the heck is DirectX 9 compatible anyway?" and all of the surrounding silence by Pinnacle, don't you? Not exactly a plethora of information, there.
I once positied that the Studio hardware requirements should say something along the lines of "a Studio-compatible GPU with a lot of the right kind of video RAM"...which would at least be CORRECT and unhelpful, as opposed to the currently merely "unhelpful" spec that PRETENDS to give you information, but really doesn't. 
I looked up the X1200, and believe that by spec it should be fully compliant with S10. Remember the old S10 hardware spec said:
DirectX® 9 or higher compatible graphics card with 64 MB (ATI®
Radeon® or NVIDIA® GeForce™ 3 or higher with 128 MB recommended for SD
128 MB required for 720p HD; 256 MB required for 1080i HD)
The X1200 GPU spec shows that it is in the R400 ATI series (in other words, "it's a Radeon"), can address up to 1024MB of video RAM, albeit via Hypermemory (in other words, it has more than 128 -- even more than 256MB of RAM), and is therefore, by the S10 spec, not merely a "compatible" card, but is most definitely a "recommended" card. Pity that for all that it seems we can't expect this card to work.
@ scoahayn: As far as capturing: How well can you capture in Windows Movie Maker (if you have that installed)? If you can't capture in WMM either, then you don't have a Studio issue -- you'd have a "something else is wrong" issue.
If you don't have WMM installed, or if you want a 3rd opinion, you can also try capturing using "WinDV", a free DV capture app, and see if it acts any differently. If you can't capture in 3rd-party software, then you can pretty much assume that you have "other issues".
I used to be able to capture DV video just fine on a Celeron 300A clocked to an amazing, blazing 450MHz, and while doing so was able to do full-resolution preview (with sound!) on an old integrated 8MB SIS video chipset. Decidedly bottom-feeder equipment, but then again, it doesn't take a 3GHz CPU to simply capture DV video over Firewire.