The Application Simulation function does require that you have Captivate 6 installed (as that is what it uses to do the capture). However, you can use the Record Video tool to capture a live recording of your desktop, and webcam if connected, which can be edited and then exported as SWF or MP4.
What does Captivate do that Presenter does not? Should I consider buying both so I am not limed in my eLearning course development. Are Captivate and Presenter designed to be used in tandem? Again, what does one do the other does not?
Think of Captivate as Presenter's big brother. They both create elearing content in a slide based format. However, Presenter is the simple tool to leverage content already created in PowerPoint, and add video, audio, and quiz functionality to it. Captivate is capable of doing everything Presenter does, but with more options and flexibility. Captivate's bread a butter is the workflow/screen capture, but it has grown to be kind of like Adobe's version of PPT.
Presenter doesn't do the workflow capture, but it can do screen capture. Captivate has better functionality for branching navigation and options for custom variables and advanced (custom) actions.
Ultimately, if you only need to work within PPT, and make those slide decks more engaging and web-friendly, then Presenter is the tool of choice. If you need to do screen/workflow capture and complicated navigation, then Captivate is your tool of choice. If you need all of the above, then have both.