I'm on a Mac but it should be similar on a PC.

Hitachi VM-625LA Camcord (a really old 8mm camcord with RCA audio and video outputs. Has a remote but you have to leave the cassette door open or the camera shuts off after 5 minutes)

I plug the Video output from the camcord into a Pyro A/C link and the Pyro is plugged into a Firewire port on my Mac.

For audio, I have my guitar plugged into a Boss GT-8 effects unit. The stereo outputs are plugged into a Behringer MX802A mixer. Then I use 1/4" to RCA cables to connect the output from the mixer to the Pyro.

This gives you live video from the camera and live audio from your guitar.

For software I'm using iMovie. Basically self explained and easy to use. Just click on Import and the live feed from the camera and audio is viewable on your computer screen.

Hit record, edit the thing. Covert it to FLV and upload.