I do a lot of screen recording for Orbiter so I can put videos up on my youtube channel. I definitely recommend D3D9Client to help ensure that you get a good frame rate in Orbiter to begin with. While recording your screen, you're going to take some kind of performance hit, so if you're using the inline graphics client, you're already off to a bad start.
As far as the screen recording software goes, fraps is meh ... I don't like it mainly for the fact that it requires an insane amount of hard-drive space when recording at 1920x1080. (Though, if you have a really slow CPU, then fraps may be your only option.)
If you have a decent CPU, you can use programs that record AND compress the video at the same time. This allows you to record at 1920x1080 and get really high quality mp4 at a small fraction of the hard-drive space. This also eliminates the need to render your video after you record. Though, if you plan to do a lot of post-recording editing anyway, then that point is moot.
I record my videos and upload the completed video without any editing, so I really like not having to spend the time rendering the video after I'm done making it.
Personally, I use a program called xsplit. But I don't necessarily
recommend it if you just want to record Orbiter movies. One of xsplit's main features is its ability to allow you to stream your games live to the Internet. It's pretty much the de facto standard on
twitch.tv
Even though I don't care too much about the streaming aspect, I still like other things about xsplit well enough to use it myself.
Other programs you may want to consider instead of fraps:
Bandicam - Not free, but has a free demo. Unlike fraps, Bandicam can compress video while recording. If I didn't already have xsplit set up how I like, I think Bandicam is what I'd look into.
Dxtory - Not free either. Its main feature seems to be its ability to record video to multiple hard-drives at the same time. If you have the right hardware, this could be a nice advantage.
If you really want free (and are willing to put in the extra effort to make it work), there's a program called
Taksi. I have checked it out myself (briefly) and couldn't really get it to work. (But I didn't put in a lot of effort.) Since Taksi is free, there are license issues. They can't include proprietary codec software with the distribution. So you have to download a codec separately. (Whereas with programs like xsplit, bandicam, etc... since you are paying for the software, they can include everything you need "out of the box.") If you want to use Taksi, you can download the
x264 codec here.