This behavior may occur if the video capture card supports the video port pin without a video preview pin. The DirectShow architecture requires that the video port pin be connected to the Overlay Mixer Filter. If this pin is not connected, data cannot be captured in DirectShow. The Windows Media Encoder is not designed to connect the video port pin, and because it is not rendered, the error message is generated.
An application such as AmCap, has been updated to connect to render the video port pin, and as such when the Windows Media Encoder goes to capture data, it now works.