DVD Player - Lion
iShowU HD on Lion makes use of a new capture system caleld "AVFoundation". In short, Lion introduces big changes in the capture process from Snow Leopard. You can read more here.
One of the more "annoying" aspects is DRM. You can observe a classic case by previewing the DVD Player in Lion. You'll get something like this:
Note that this is not unique to iShowU. Other apps (e.g: Skitch) will also not be able to capture images from the DVD Player. This is a restriction placed into the OS by Apple.
Workaround for DVDs
You can work around this issue by using VLC to play video.
VLC can be downloaded (for free) from http://www.videolan.org/vlc/
When using VLC, you'll get what you expect. Namely:
