Just thought I would post to help others with same problem. I had a lot of difficulty getting FCP to recognise my XL2 for DV transfer onto my G5. After searching round on the 'net I came across a comment that suggested my external Lacie drive might be the problem. I switched it off, retried the capture and hey presto, everything worked okay. Hope this helps someone out there.

I have had to re-start FCP, plug unplug the firewire cable, configure the Time Code on the XL2. Now, it's recoginizes right away if the camera is in VCR mode, the camera is on, the Time Code is turned on, the cable is firmly in place, and then I start FCP. I thought for a while that maybe my firewire cable was damaged internally or something. hth (hope that helps)