Unfortunately FRAPS can't spend much CPU time to encode stuff while you're running a game. As a result you either have huge files with nice image quality or small files with absolute crappy quality. The FRAPS FAQ recommends using Virtualdub to compress the large videos. It's free and since quality is all in the codec (not…
IMHO, the free Sorenson codec is crap. You need to pay for the good Sorenson that the movie studios use for their Apple.com trailers... then you get 2-pass VBR (Variable Bit Rate) which is a huge improvement. First pass of the compressor analyzes which parts of the video are slow-moving, and allocates more bits to the fast…
Have you tried virtualdub? It's free, and will compress with divx xvid and other codecs. Output is .avi only, but the compression/quality is impressive.