This is not the issue here.

DScaler supports Overlay for historical reasons and Direct3D9 surfaces. It just defaults to overlay.
When set to DirectX it actually means that it uses the Direct3D9 surface and it should work fine.

With the complete system freeze I suppose it is some issue with the hardware access. Though I also use a Pinnacle pctv and I don't see this issue.
I use as Tuner here 036E.

I have tried the Overlay thingy, but as I am using an AMD graphic card. No success.

I have left the Card and the tuner as unknown before, because that is what autodetect does. When I select the Pinnacle PCTV Pro, it auto-selects the Temic 4002.
The video decoder, vendor ID and Device ID are detected automatically and properly. Bt848m 109E and 0350

Now it is working perfectly!