Ok, this needs to be out where people can see it and contribute:
I'm using Fraps for recording, I don't remember if it's free because I got it a while ago. It can record both sound and video, but in the large avi format. Once I record, I use Adobe premiere pro, which is commercial as far as I know, where I edit and export it to a you tube friendly format. Somebody might get the better specs than the ones I have, so their video's might be clearer.
All of this is on windows XP.
As for how to set such stuff up, you tube is full of instructional video's and tutorials. I guess anyone looking to make vids can post questions here, and anyone with answers can post them.