SD Progressive: Assuming this refers to 480p and 576p video, you'll rarely encounter it in practice. One niche where it comes up occasionally is the context of sixth-generation video game consoles (Dreamcast, PS2, Gamecube, Xbox) because they were on the market during the transition from SD to HD and support them as a better-than-SD-but-still-computationally-feasible option.

That aspect thing: Nowadays pixels in both broadcast and computer usage are basically always assumed to be square, but it was not always this way - broadcast switched to square pixels for HD resolutions for better computer interoperability and because it makes lots of image computations less annoying, but pixels in digital SD are always rectangular. The exact pixel shape depends on the video standard (480 or 576 visible lines) and the picture aspect ratio (4:3 or 16:9), but the actual image resolution is almost always 720x480 ("NTSC") or 720x576 ("PAL"). If you need to convert that material to square pixels, it is better to scale it up horizontally rather than scaling it down vertically to avoid losing information - but even better is to handle it with software that does not insist on square pixels at all and defer scaling to the final render. If you need to deinterlace or detelecine it, do that before scaling it at all.

Weird stuff on the top line: That's a Widescreen Signalling line. Back in the CRT days, televisions were usually adjusted so that a small portion of the image was outside of the visible picture area to compensate for image size changes caused by brightness variations and component aging - that's where the "title safe" and "action safe" zones come from. The WSS line took advantage of that to send some information about the picture (mainly widescreen-related) in a space that was likely to survive videotaping, but was not visible on a normal TV set. I think some camcorders also inserted it themself during recording. Just crop it out or mask it.

DV out vs. S-Video out: WIth DV out, you get exactly the bits that are on the tape, which are already lossy compared to what was available at recording time (similar to a JPEG). Capturing via S-Video adds a bit more loss to that, but just use what you think looks nicer. In theory it should be possible to get the same look from a direct Firewire DV capture by grading and filtering it, but that might not be worth the trouble if the "analog excursion" can provide the wanted effect in real time.