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It sounds like you're looking for Adobe Captivate, which is a separate product. It used to be called "RoboDemo."
Just as an FYI, RH 5 had a recorder in its Tools section. It seems to be gone in RH 7...
RHX5 has a "Video Software Camera" application in the Tools tab but it never seemed to work for those that tried to use it. Users were directed to use RoboDemo (the predecessor of Captivate) by Macromedia so even they acknowledged that this tool was not up to much and that they weren't developing it.
RH7 has a lot more integration with Captivate. It even allows you to use a toolbar icon to create a Captivate movie whilst in a topic and insert it. You have to have a license for both products or the TCS though.
Colum is spot on with this. I believe the reason it "never seemed to work", is because it had its roots in the early days of computers when we had to employ small children to carve what we wanted on the malleable clay that was the screen. Actually, that's where the name "screen" comes from, as we had to put a layer of netting across the front to keep the crumbles from falling into the keyboard.
All joking aside, (in case you read that and are scratching your head, it's my feeble attempt at geek humor) the Software Video Camera was neat in its day. But if I'm remembering correctly, it required the color depth to be set to 256 colors and it gagged or refused to run on many of the "millions of colors" setups that are commonplace in today's world.
Happy Friday the 13th all!