I have an OSD that I would fiddle around with till I'll get new camera. For OSD to work, I need PAL video signal, it may be anything, like black only. I was thinking may be test video signal generator would help, but those things are way too expensive for such task, may be it is possible to make something simple using arduino? I don't have any analog video source at home, like VCR, my notebook does not provide S-Video.
You can use an Arduino to output NTSC/PAL Video.
I have used this and it does work, easy to set up too.
Simple board cameras are pretty cheap, and many are available in PAL or can be configured to it with a change of a strapping resistor on the board.
With a DAC (possible an R2R ladder) you can generate PAL in an FPGA.
There are various simple video game kits, such as the YBOX based on a Propellor chip, which output video. Not sure if they do PAL with the stock firmware, but it could probably be modified for that if someone hasn't done it already.
Using a general purpose micro, a common trick is to get the clock speed to some multiple of the colorburst frequency, and then work out all the timings in relation to that. You can output a square wave at various phases (then use a passive low pass filter) to make colors. And if your goal is only to make some color bars or a bounding rectangle on the screen, working it all out in assembly language and counting cycles is within reason.
If you place a want add in a local publication you could probably pick up an old video game system quite inexpensively.
S-Video to VGA/RCA adaptor cable which looks like this: Configure external video port as PAL TV.
Then use your computer to generate video
Dozens of LCD test patterns here freeware with DPT.exe