That is correct, as long as you set the PC to 640x480 resolution then you will get a clean signal on the S-video and the composite video outputs. If you go higher then that you get a garbage signal out. I believe it also needs to be set at 60Hz refresh also, I will double check it.
I double checked the unit today and yes the computer video output has to be set at 640x480 @60Hz refresh rate. I tested on the S-video and Composite out and both worked at this scan rate.