oooh... may have answered my own question.

http://www.jingproject.com/

Take a look... free software that is by the same group that makes camtasia, and snag it. It records audio and video.

That'll be a bummer... I don't see that listed anywhere on their site.

I'll test it out tonight.

i had problems with camstudio

However, the kid (he is 6) likes club penguin and I noticed the vids he watches on youtube are recorded with hypercam. It leaves a watermark if you do not pay, but it seems to work fine and the watermark does not matter (it just says hypercam up the corner). Not tried the sound settings yet though.

But it seems the best free/cheap alternative I have found.
http://www.hyperionics.com/

I use debut video capture software, pretty good for me you can output in a variety of formats, AVI, WMV MP4. Furthermore, you can get a free file converter for those it doesn't do...

Hi-
Ive checked out camstudio and a couple of other links in this thread but for some reason i cant get the audio to record. Does anyone have any advice or know of any troubleshooting page, etc. that might be able to help me as far as getting the audio recorded? Thanks

I have version 2 which is probably out of date by now but if you're having trouble recording audio I would recommend to go to the options/audio options section and tick "Use MCI Recording". The only problem is the audio will be recorded uncompressed and you'll have to compress it afterwards using a program like virtual dub (www.virtualdub.org).

To jlee, I would recommend downloading the XviD codec and using that to capture the video (in video options). Then it should playback on windows media player without any problems, as long as the viewer has the XviD codec. Bear in mind with XviD the pixels of the capture area have to be even numbers (ie. 800 x 600, not 800 x 599) otherwise you'll get an error message. Also bear in mind that an XviD video may not play back in camstudio's own player window that opens after saving. Just ingore that.

yeah i tried that... still a no go.
i wonder, can i use my webcam as a microphone? cuz i get some kind of error message when selecting my speakers.

Depends whether your webcam works like a microphone. Probably easiest to just buy yourself a microphone.