getting rid of interlacing and what program is best for that.

i recently got the avermedia usb gold capture device and it seems to be going fairly well so far. 2 things though. vegas 8 won't even let it load up, has some issue with enabling it for capture and secondly no program ive found so far has been able to remove or fix the interlacing problems caused with the older game systems being connected up like a ps2 etc. any program suggestions as to whats best?

 

VLC has several de-interlace options.