You didn't mention which program you are using, so I will assume you are editing with Windows Movie Maker. Whatever the case, the default setting for saving video is "best quality for my computer." You will need to change this setting to "HIgh Quality video (NTSC)." This will keep the footage from your video camera at a quality suitable for viewing on TV.
You didn't describe what you meant by "degrading video quality".
Is the image itself grainier? Or is it dropping frames and jumping around a bit?
If the latter, you need to make sure that you're writing the file to a hard drive that is different from the hard drive that contains the video software. The heads can't move back and forth fast enough. If you're USB port is 1.1 instead of 2.0, you're possibly dropping frames like that.
Also, you can't partition one hard drive into two drives and make it work. The limiting factor is the number of read/write heads available, and that will always be the same regardless of how many times you partition a drive.
Agreed. Use another hard drive preferrebly on the 2nd ide channel (you might have to swap CD drives or something).
I'm editing video with one hard drive but my problem is RAM. I have 512mb and when playing with a long video, it quickly tops out and uses the swap file. And THAT can be a problem as well. Go cntrl-alt-delete and look at your task mgr. If you're going over your physical limit, you're bogging down the PC. I suggest at least a gig of ram for video editing. Also, get good ram like Mushkin HP, Kingston HyperX or Corsair XMS.