AA = Anti Aliasing
AF = Anisotropic Filter
Those options can be changed inside LFS, recording is a heavy task for the computer, so it's normal a FPS drop, but not that much as you are suffering.
LFS has a "bug" while recording with Fraps, it can be avoided by turning sky to 16 bits.
Lastly, recording writes a lot of data on the hard disk, so it needs to be defragmented (if this is the right word xD).