There are two primary issues with (low-cost) multi-channel encoders that are on the market today. The first is that most have proprietary drivers that are not Direct Show compatible. Vitamin D Video works only with Direct Show compatible video card drivers.
Second, and the problem you are running into, is that low-cost multi-channel encoders are actually single channel encoders with multiple inputs. This means that they can only get video from one of the inputs at a time. This is why they are low-cost.
With these devices, you cannot get video from more than one channel simultaneously. Thus, Vitamin D Video only supports one channel for these devices.
Examples of USB-based single-channel encoders that are Direct-Show compatible and known to work:
Tested (Kworld DVD Maker, $39)
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http://www.amazon.com/dp/B000234SMQ/ref ... B000234SMQ