Connecting Sony Digital 8 Handycam to Computer

I have this camcorder and would like to know how to connect it to my iMac G4. It says in iMovie 2.1.1 to use Firewire, but there is no FW port on the camcorder. The outputs I do have are:

S VIDEO ID-2
AUDIO/VIDEO ID-2
LANC/DIGITAL I/O
DV IN/OUT

I know this can be done because the guy that used to own this camcorder and computer shot a whole movie and edited it in the computer.

Also, will I need to record to a tape first then transfer to computer? Or can I leave the camcorder hooked up to the computer and just "capture" video that way?

Much obliged!