Just to confirm what someone pointed out earlier, the 360 controller doesn't work on the PS3. The PS3 will see something plugged in but give a message of something like "An unsupported device has been plugged into the USB port."

The error message says something about HDCP. HDCP is basically an encryption system used to encrypt the signal for HDMI cables to make it harder to record stuff that wasn't intended to be recorded. Something you've got the cable connected to doesn't support HDCP encryption (it might be the monitor, it might be the program, which makes the entire thing not work. The only thing I can think of would be to follow the suggestion in the error message and connect the PS3 through something other than HDMI (component cables, composite cables, etc).

Edit: Just found this on a forum after a quick google search:

AVerTV HD DVR is designed not to capture, convert or transmit video or audio from any Copyright
Protected sources or devices (HDCP devices & Macro Vision protected content).

That means that either the DVR itself or the program you're using (likely both) don't support HDCP, which means that you won't be able to play most games or blu-ray movies through it.

Assuming you don't have to have the signal in HD and assuming that your laptop has an ExpressCard slot, I just bought one of these:

http://www.newegg.com/Product/Product.aspx?Item=N82E16815100045

It's not HD though; just standard composite/S-Video cables. However, I haven't had any lag with it so far playing a couple PS3 and Wii games on it (I don't have a 360, so I can't comment on how that would be, although there's no reason to think it would be any worse.) Only problem I've seen so far is that the screen was a little dark (at least on the PS3, the GameCube games I tried were pretty good); I've been looking for a good S-Video cable to see if that helps.

Anything that would record in HD would be a much more expensive (probably over $120 or so from what I've seen).

Another thing you could look at is the Vbox 2 (http://www.xcm.cc/vbox2_advanced.htm). It uses component cables and isn't HD either, but a friend of mine has one and it works pretty well for all the games I've seen him play. Also, he uses it on a netbook, so I'm pretty sure it could run on just about anything.