A few things that might help isolate what is going on:
> How old is the VCR? Does it have a tracking control eihter on the remote or front panel? DOes that make any difference?
> Is the underlying picture OK, but the color is flashing, or is the whole picture breaking up? Is there any "tearing" at the top of the picture?
> Is the connection between the VCR and 1070 via S-Video or standard composite?
> What is the connection between the 1070 and your display? What type of display?
> Not seeing you offer otherwise, one presumes you have no problems with other sources through the 1070 to your display?