Are you just looking to grab a few VHS tapes and never dealing with analog again? Ever? Not even vintage game consoles like a SNES or PS2? Your answers to that will determine the hardware questions, for the most part. Also, if you ever plan on using a HDMI capture card for things like a DSLR, camcorder, or consoles, you might as well get a modern UVC HDMI capture card that works in macOS/Linux, e.g. Elgato Cam Link or Elgato HD60S+, and get a used RetroTINK 2X off Ebay or something.
As for getting your existing hardware working, try adding an audio input capture and look for a device called something like "Dazzle Video Capture USB Audio". If it's there and you can add it, I suggest right-clicking on the newly-added source, selecting Properties, and disabling hardware timestamps (known issue with lots of capture hardware, especially older stuff). You'll also need to click on the gear icon in the audio mixer, select Advanced Audio Properties, then change the monitoring mode of the capture card's audio to Monitor and Capture.
That said, your Sound Blaster X-Fi probably has superior analog audio input performance.
Speaking of performance, I noticed that Dazzle is capturing in I420 color mode, aka 4:2:0, which is terrible for SD. Ideally you're looking for a 4:2:2 color mode like YUY2, UYVY, or YVYU, assuming the hardware even supports this. The underlying magnetic tape has a functional chroma subsampling of 4:2:2, so anything better isn't needed.
Also keep in mind that analog SD is 720 pixels wide and either 480/486 or 576 lines of vertical resolution, depending on NTSC or PAL, which is then stretched to a 4:3 canvas (SD doesn't have square pixels like a modern display, even in digital form, e.g. DVD, and even anamorphic widescreen DVDs are still 720 pixels wide). The interlaced field rate will also be either 59.94 NTSC (60.00 isn't a "real" video fps rate) or 50 PAL, which will deinterlace to a progressive 29.97 or 25 fps, which is what you should set OBS itself to. If you plan on using the videos from OBS in an editor like Premiere/Resolve/Vegas, I suggest keeping the 720 horizontal resolution and correctly stretching in post. You can also right-click on the capture in OBS and set the deinterlacing mode to Yadif 2x, but your ancient CPU might be a problem there. If you want to get technically pedantic about it, you should also crop 8 vertical pixels off each side of that analog capture if it's NTSC to eliminate analog timebase issues and make the final rendered video 708 vertical resolution.
Honestly, for stuff like raw SD tape capture, something like GraphStudioNext or VirtualDub2 are much more precise tools for the job as they can capture and write out to interlaced-aware 4:2:2 formats like ProRes or raw YUY2.
I also suggest watching your OBS stats in View -> Docks -> Stats as performance on that hardware will be a real problem.
Am I understanding correctly that I can download WIN 10 for free and if I do a clean install I can use the product ID from my current version of WIN 7?
Yes, that is correct. You don't even need to type in the key if your current Windows 7 has an active and current activation and you've manually run Windows Update recently. Provided you don't change the underlying hardware during the fresh 10 install, the first time you manually run Update, Windows will automagically activate itself.
