First of all, don't record to multichannel unless you specifically need it. Second of all, check your default devices in windows sound settings. Judging by the grayed out external input, windows isn't even pointing to your mic anyways.
/edit
I read that at stereo speakers, but the default devices is still important.
Make sure your speakers in the windows Playback tab are set to your default device. To make sure they're the ones you want, run audio in the background you want fraps to record (e.g. ventrilo, winamp) and see if the peaks are moving.
Show them your butt, and when you do, slap it so it creates a sound akin to a chorus of screaming spider monkeys flogging a chime with cacti. Only then can you find your destiny at the tip of the shaft.
Okay, I'll explain this a bit further.
Fraps reads the default devices in Windows control panel. So, you want your speakers or whatever outbound that gets all of your audio activity to be your default device, and your mic to be both your default device AND default communication device.
It's retarded, but since fraps hasn't had any competition in its lifetime it has never received a proper update.
Show them your butt, and when you do, slap it so it creates a sound akin to a chorus of screaming spider monkeys flogging a chime with cacti. Only then can you find your destiny at the tip of the shaft.
set the input device as stereo mix.
Once you can record from audacity, fraps will record your audio.
You can't record both mic and stereo mix without playing the mic audio through the speakers.
"Parliamentary inquiry, Mr. Chairman - do we have to call the Gentleman a gentleman if he's not one?"