We've just begin using this method for recording How-To videos for the MerusCase Knowledge Base. It's a little involved, but sometimes nothing works better than "show me how".

1. Download and install CamStudio, open source Screen Recording software. 
2. Most of us here use a dual-monitor setup. This is an ideal situation because you can record one entire screen. Set your screen resolution to a video-friendlier size, like 800x600. You'll also need to set your primary monitor to the screen that you want to record.
3. In CamStudio, set the "Region" to "Full Screen". I also like to set the View to "Buttons View" in case the CamStudio control panel ends up in a portion of your video.
4. Sanitize your desktop and whatever you'll be recording. That means the profanely named files on your desktop will have to be stowed somewhere else for now. Close extraneous applications, too.
5. Record your video. Don't worry about mistakes, just get good footage.
6. Download VirtualDub. "Install" this by downloading and extracting the zip file. Run auxsetup.exe to perform some basic setup. Then create a shortcut for "VirtualDub.exe" and place it somewhere convenient. 
7. You'll need an MP4 encoder if you want to finish uploading to YouTube before strange hair starts growing out of your ears. You may already have one -- the Windows DLL required is mpg4c32.dll. I had a hard time naviagating the Windows Media download site at Microsoft's site, but I found what I needed by running the installer at http://www.freepctech.net/files001/wmtools-comp.zip
8. Open the video file generated during your CamStudio session.
9. Use VirtualDub to delete sections of the video as needed. "Set selection start" and "Set selection end" under the edit menu are your friends here.
10. Set your compression to mpeg 4 in Video->Video Compression.
11. File -> Save As AVI to finish up.