More experiments and I have found that most of the default settings do a good job with Virtualdub capture and filtering. Also, the Tmpgenc defaults for SVCD work pretty well also. I have used the following filters and settings when capturing from VHS tapes. Click here to view latest filters and settings I have used with VHS tapes.
I capture at 352 x 240 using HuffyUV YUY2 compression. I use the above filters to produce a second avi file. I then use TMPGenc with the standard SVCD settings from the wizard and get as good or better quality than all of the previous tinkering with settings that I have tried.