Okay prospective LPers, if you want some help here's my setup:
I have CamStudio recording from microphone, with the mic device set to Stereo Mix (this will record the game sound), and then I have Windows Sound Recorder recording from the hardware microphone, which is the default device it records from. Go ahead and use Audacity or something instead if it works well for you.
To be able to choose Stereo Mix (I think this only works on Vista) right click the little volume icon in the bottom right, and open Recording Devices. Now right click inside the window, and select "Show Disabled Devices". Now Stereo Mix will show up! Right click it and select Enable. Now you will be able to record sound directly from the speakers
Now, I always start recording the sound first, and then try to click loudly when I start CamStudio so I can easily clip off the excess from the beginning of the audio when I'm done. After you have recorded the video, you should have a gigantic .avi and an audio file. If you used Windows Sound Recorder the audio will be .wma, which Audacity can't open. I like to use XMPlay to write the .wma to a WAV file (to do this, open the file in XMPlay, open Options and Stuff, click Output, set the device to WAV Writer, and play the file from the beginning) and then open it up in Audacity to trim it. If you recorded the audio with an audio editor, you'll have it much easier.
When the audio is all edited up, you can export it as an .mp3. At this point I load the two files onto Windows Movie Maker. If you don't have this, you can probably find some similar program, hopefully... Anyway, then I trim up the video and audio a bit more as needed, and then use the Publish to Computer button. Choose whatever file name and directory you feel like. In the next window, you will choose how to compress the video. I always use "Compress to...". I like to make the file size as small as possible without the resolution figures shown in the bottom left changing, but you can do it however you want, as long as it ends up below the hosting site's limit. Now hit publish, wait a while for it to finish, upload your video and you're done! Simple!
Or you could just set CamStudio to record from the microphone, and move your speakers right up it, but that can sound yucky, and you have to crank the volume rather high.