Yeah man, you don't need fraps for source games, silly! That's what Source Recorder technique is for! :P
The link Geokill just posted above (
http://forums.fortress-forever.com/s...ad.php?t=18373 ) is my own thread in this same forum, sticky'd, explaining Source Recorder. It's no doubt the best quality you can get. And it's not even a program, it's a very good recording technique.
The advantages with Source Recorder, even if you have Fraps, is that you can get smooth footage from any sort of mass physics, which Fraps has a big trouble handling. And it's the best quality you can ever get from a source game.
Also, try and find a free video-editor; I've found some before. They're probably automatically better than Windows Movie Maker, and definitely have better encoding options.