CCTV systems are covered under the data protection act but only if they are on business property, this does not apply to residental property, as long as it is not recording public areas ie. pavements, roads, parks, or anybody elses property unless you have their permission - ie, nextdoor neighbour who would like their driveway covered as well.
As for the hardware, you can get Composite video (the standard CCTV output) to USB converters that will allow you to plug a camera into a USB port on your PC. You can use these to record to your pc, although obvisously you will need sufficent space on your drive depending how long you want to record and at what quality/fps. This means you can get a standard CCTV camera and an external housing and use the converter to do what you're asking.
As for the cameras with the built in LED's, as a rule, don't bother, as the range of these LED's is minimal, and never anywhere near what the manufacture states.
I would say don;t bother with a colour camera unless you have extra money to spend, as the cheap colour cameras are near useless at night, and the ones that are good in low light are expensive. A monochrome camera would be your best bet unless you really need it in colour, as it doesn't need an IR cut filter, so it picks up ambient IR light, much like a nightvision camera works (but obviously not to quite the same extent).
A decent professional monochrome camera would be about £55, with £15 for a lens,about £25 for a housing, and £38 for a USB converter. This totals at about £133 + VAT (not including cabling). This may be more expensive than you're average B&Q video kit, but at least it will provide you with usable recordings.
how much are those?
