Directly connecting the USB cameras to the PC will allow Security Monitor Pro to see them individually. Viewing through a USB DVR device will show all the cameras in a single image.
Any masked area you use does not appear in your recording. Nothing will be obstructed from view in the recorded video. More information about masking is available here.
To get the maximum quality in the recording, click Camera >> Manage Cameras, select your camera, click the 'Edit Camera' button. Choose 'Actions' and click on the 'Configure' button. In the Video Recording Options move the slider for Video Quality to the highest level.