For what it's worth, I'm only a newbie at this myself and I have been having similar problems with Video Studio 4SE.
I believe my system is the problem, in that the hard drive and cpu are having a hard time of it. My current system is a PII 266, 128MB 66 SDRAM, 4MB Tseng 6000 and UDMA33 4GB HDD and Firewire card (I consider this greatly under powered but I was just having a crack it why I research a more suitable system).
Which brings us back to the problem of freezing/crashes.
What I did which had some effect:
1. Updated to DirectX 8 (I'm using PAL and MS were a bit behind the 8 ball on PAL). This greatly improved things. Still had crashes though.
2. Assuming the system was probably the main culprit I did what ever I could to try and free up some resources. Basically what I did was (using WIN98SE) created another hardware profile and stripped everything I could out of it so there was less contention for system resources (network card, USB devices etc), and
3. Deactivated any software that might be accessing the system at an inappropriate time - power management, USB polling applets, tray applets etc - just about anything I could get away with.
The result - I managed to render in the lean hardware profile about 10 times straight with no crashes or freezes using Video Studio compressing with DivX.
I did manage to crash it but I noticed it was doing some serious thrashing and processing when I configured DivX for a maximum processing run.
Conclusion - in my case I believe my system is totally underpowered for this sort of thing but the interaction between other components and dubious software running in the background can cause added hassles to a borderline system.
Anyway thats my experiences with freezing/crashing - take from it what you can.
I still need to test a decent size capture run to see how that goes. What do you know about file size limitations in Win98 FTA32 and how to get around them when Video Editing?