If you have Fraps > Movies selected 'Detect best sound input' and it chooses Microphone, switch to 'Use Windows input'
Go to the Windows volume control panel, then choose options > properties, select Recording and check the box at Stereo Mix or Wave.
'Wave' will record only sounds from your computer soundcard, eg. from games or media players
'Stereo Mix' will record from every source - wave, microphone, cd player, etc.
Also be sure that your Wave/Stereo Mix volume is high enough (for me, Stereo Mix at around 10% of the volume is good).
If you don't have the 'Wave' option and you dont want to hear your mic sounds, temporarily mute the Microphone volume in the same panel.