Guys I got some groundbreaking news. I found a new program called the "ZD Soft Game Recorder". And let me tell ya, this blows FRAPS out of the water! In fact just think of it as a mix of FRAPS and Tech Smith's screen capture programs like Camtasia and SnagIt.
www.zdsoft.com And a video I made of one of the results.
Ever since I found this program, I haven't used the built-in AVI record feature in emulators, and Keranu if the preview screen itself doesn't have waves and only does when you're done capturing, you can also probably cheat your capture card with this thing and successfully get a good Sega video
Best thing about it, you can also record in MPEG for this thing so that you possibly won't have to go and compress it.