USB and firewire aren't the same thing but they are similar. At any rate, you're using a digital cable to interface to your PC and not a set of RCA cables so you are on the right path.
Try this: Make a short (20 seconds or so) test recording. How is the playback? Often when you are capturing, your maching is working hard to keep up so your real time monitoring may be choppy but your playback will be OK. Then again, maybe not. My audio often goes choppy during capture, but plays back fine, and my machine is powerful.
Also check your capture preferences within the software you are using. I always capture files as *.avi and after I've edited them, I render them as a MPEG2. As shadow29 mentioned, this will swallow a hard drive PDQ but it's the REAL way to do it. You shouldn't be using MPEG1. This also may be part of your problem.
I've only used Intervideo like once and found it to be less than robust enough for my needs. I can't remember for sure but I think I had some sort of problem with it too. Ulead Video Studio is quite inexpensive, very user friendly, and self contained. There's even a fully functional trial version at their website. I moved on to Media Studio, it's kinda buckish.