From VCR to computer you'll need a video capture card. They sell ones built-in to many graphics cards (ie ATI's All-in-Wonder) or you can buy a seperate PCI card. IIRC they're going from $40 and up on pricewatch.com.
Then you'll need some editing software, a cheap-o version usually comes bundled with the card.
To get it in a somewhat portable format you'll need to compress the video with either WMV which is available with Windows Movie Maker for Windows XP or using another codec (quicktime, real, DivX)
If you need the encoder for DivX pro it is available as part of the
K-Lite Codec Pack btw this is probably the most complete video codec package
Anyone else have suggestions?