I am trying to capture some clips in Premiere Pro 1.5 using Canopus DV Storm Capture Hardware.
I go to Project Setting > Capture > Capture Format ("Canopus DV Capture") then i click on " Options" for the capture inputs... and I have three options inside that box, 1. Input Channel, 2.Audio Sampling Rate and 3.DV Codec Microsoft Compatible box.

What is this Microsoft Compatible box thing for? By default its blank. should i have it checked off?

Stick with the canopus codec... I think it's better than the ms codec, and Storm is fussy about working with non canopus codecs.

doesn't still do it in a Canopus DV codec... and ticking off that box would make it MS compatible.... or does is use MS codec all the way through

I'm not 100%, but I believe it will use a MS avi codec, not DV. Leaving the box unchecked, will use the Storm DV codec. Either way, Premiere will work with it.

However, the Storm program will only want to work on video using the DV codec. It wil ignore most others, like the MS codec. If you are working in Premiere only, it won't matter at all.