Need Help Designing A Hardware Interface

You can use a 'TV Capture' card. They are PCI devices that are installed in the computer and can provide RCA / S-Video and RF inputs.
Additionally, these 'capture' cards can also be found in USB form and offer most often the triplet of RCA connectors for composite video. Both solutions rarely allow you to capture audio only through the RCA inputs if there is no video feed.
Expected price should be no more than $30-$45 often with the more expensive ones offering additional software or an extra input.

If you want to ask a sales rep at a local best-buy or radio-shack, you may have to tell them you want to simply record your VHS tapes to your computer. I find if I tell them something unique like that, they get confused...
If they offer a 'USB VHS player' tell them you already have a VCR and want to hook it up to the PC.
There is a device called "Dazzle*" that may do what you want .. and the big box stores usually sell it. It's by far not the only choice though.

One word of warning here though!
These capture cards usually introduce a delay. I've found the delay can be pretty sever and can actually make playing a video game on your capture device very difficult/impossible to play. This delay can be caused by the software displaying the video/audio, or by the hardware itself! If you try a product and realize the delay is too high to do anything interactive with the input for the capture device, try some third party software solutions first. If it's still too bad, you may need to upgrade to a PCI based capture card instead of USB.
Of course, mileage will vary based on how stubborn you are

 

Yessir. It absolutely will.
The only concerns are going to be quality and latency.
When converting media, latency does not matter... it could take 2-3 full seconds from the time it gets the input to the time it saves the file and it makes no difference.
When broadcasting or doing anything interactive, this latency can be a problem. As mentioned above, latency could be hardware or software related... so if you notice a lag while you use it, try a different capture program.
You may also notice that the video does not look as good on a computer monitor... composite video provided over S-video and the Yellow RCA plug will be interlaced. Some capture programs filter the video, some do not. While filtering helps with quality, it can usually increase latency a little depending on the type of filter used.

Anyway, I can keep going, but I think it's best to finally dive in and get one. You should be able to easily find one. Check the web-site for local shops before you head out in case they get confused as to what you want. It's a simple enough request, but some sales people can be silly that way. (It's not the newest hardware, and it's peak popularity started to die out when stand-alone DVD burners and VHS converters began to be sold)

 

Sounds good. Best of luck.
Additionally, you may be able to find a new/used 'TV-Tuner' PCI card at a local computer shop.
Many of the HP brand 'media' computers had these cards built-in and can easily be used on another machine after you download and install the drivers for the matching Hauppage Part number.
These PCs are probably 8 years old by now, and if you can pull a card from one, they are free xD
I've worked with 3 models of them thus far, and using a third party capture program has offered almost zero latency... good enough for me to play first-person shooters on the same computer I am doing the capturing on without having to split the video signal to a regular display.

 

Sounds good to me. USB based capture device.
It will either work, or work really well. My only concern is the latency between when the signal gets there and when it shows up on screen, but that may not be important depending on the exact use