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To me, it seems like the DVD recorder is picking up feedback from something. As the DVD recorder outputs a picture over both the AV input and TV-Output Scart sockets, there is a possibility that the VCR may be feeding the incoming signal on the scart back out again. A faulty Scart lead can also cause this, however this can easily be tested by swapping the ends (or trying another lead), since the video in one direction uses different wires in the lead than in the other direction. If your VCR has Two scart sockets, try hooking up the other Scart socket.
Alternatively, if you have a Scart to Phono AV kit, try using this to connect the VCR to the DVD recorder, as this will only let the audio & video pass in the one direction. Finally, as a last resort, you can try connecting the VCR inline with the aerial such that the the RF-Out on the VCR connects to the RF-In on the DVD recorder and tune in the VCR as a broadcast channel on the DVD recorder (just be warned that on a Lite-On, this means retuning everything :doh: ). The picture quality will be roughtly that you would get with a composite connection, however regardless of whether your VHS tape or VCR is stereo, the RF signal will only have a mono audio signal.