To maintain original quality off of the dv tape, what kind of compression should be set in the capture and sequence presets (FCP4 HD)? When I select "none" it tells me that there are dropped frames. I have recorded at 24p 16:9 on a Canon XL-2. Also, should the compression be set to 16:9? Should it also be set to interlaced or progressive? Can anyone help?

You should use NTSC DV 48khz anamorphic (assuming you have an NTSC camera). You can't capture uncompressed over firewire, and it is unlikely to do you any good anyway. Almost all DV editors edit compressed with the DV codec. There was a thread about this a couple weeks ago - someone else with an XL2 I think. Your camera records compressed footage to tape so you aren't losing quality from the tape when you capture in DV. Your camera also records interlaced footage, so use interlaced.