The answer is, it depends on way too many things for us to tell you
exactly what to use.
If your capture software creates a straight AVI file then you could
use something as simple and free as Virtualdub to compress it using
the free XviD codec (available separately or part of ffdshow).
If it creates MPEG2 or MPEG4 files, then you'd probably need to use some
other tool like WinFF to compress to something usable.
You may be able to upload raw files to YouTube and Vimeo and
they'll convert them to their internal format (mp4 container using
H.264 codec), but raw files are usually so huge that it's not
worth the time to upload them.
If what you're really asking is what to use to edit the video
then there are many threads you can search for on that topic.
Generally you get what you pay for, when it comes to video editors.
The cheap or free ones often suck.
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