I need to record a step-by-step tutorial using Photoshop. I tried the
demo versions of Camtasia and other video screen capture programs, but
I didn't like the "jumpy" look. So I decided to go with connecting my
camcorder (hdr-fx1) to my PC (emachines laptop) via the S-Video
connection. I got the Background to appear on my camcorder, but not
the icons, cursor, or anything else. How do I record the programs and
their functions to my camcorder

I would NOT recommend doing what you are doing. It would be much to
time consuming. For tutorials, I personally use macromedia captive.

It is very easy to use, and can make several files compatible to any
machine, including EXE's. If you just want a single demonstration,
just get the free demo. www.macromedia.com/software/captivate/

I used this for a presentation for a change (rather than explaining
it, or trying what you did) and it worked remarkable well.

Great Question and a Great Comment!

I'd like to do some of this, too.

I personally use Sony's DVDirect device as a hardware mpeg encoder
straight to my PC (vs to DVD which is what its primarily designed
for).

If you aren't seeing your icons or cursor it seems as though your
video driver is having a hard time picking up layered windows. I'd
make sure your resolution is set to 1024x768 or less when using svideo
out - and that you have upgraded to your video driver manufacturer's
latest driver version.  This may clear up the buggy behavior you are
seeing.