That "use s-video or composite" statement means that to get video out of the TV to a VCR or DVD burner to record, you cannot use the component (i.e. colorstream) inputs.
Make sure when you hook up the cables, you aren't mixing up the inputs. On my Toshiba, the colorstream inputs (green, blue, and red) are arranged vertically, right above the audio inputs (white and red). In order, they should go green, blue, red (video) white, red (audio).