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Hi there and welcome to the User Forums!
What you are looking for is a full-motion video recording. Captivate 2 has full-motion available, but the product is designed to use it for only brief periods - for capturing such things as grabbing a scroll elevator, or a drag-n-drop of a file object. It is definitely not designed for on-going, continuous video capture. If you upgrade to Captivate 3 you will find expanded full-motion capabilities.
Other alternatives include the use of software designed specifically for creating AVI videos. One popular software package for this is Camtasia, but there are hundreds available out there - just "Google" for a string like " create video".
Having said that, if you use Captivate as intended, the action you describe can be captured easily, and with amazing clarity and real-time appearance of your actual activity. This is not really the place to conduct a complete seminar on the product, but there are more than a half-dozen tutorials (created in Captivate) accessible on the main user interface (UI) - look in the right-hand column on that UI. The titles tell you what each contain. There is also a sample movie or two that was included with the install. You might find it helpful to open that and after looking at the timeline and other features, use the Preview feature to see what a Captivate movie looks like.
After looking at some of those resources, come on back here, as you will probably have more specific questions we can help with.
Best of luck to you.
Larry is right, take the time to view the tutorials and see how the demos were created. It will make the whole thing so much easier. In the meantime...
When you move your mouse from Start to All Programs and the list appears press the PrintScreen button. This will create a separate slide. Do this everytime you see something new but don't hear a camera sound. Then you can play with the timing to make the slides transition smoothly. I also recommend recording the audio separately and inserting it.