samforey12345, with your computer you should have no problems recording, even if that 3,3 GHz is a cheap Celeron model.
Of course FPS drops when you turn on Fraps because Fraps then wants some of the "power" your processor is giving to LFS. It's like asking why a car is going slower if you put a ton of steel on top of it.
Usually people record LFS movies from replays. That way you can use a trick where you put the replay on 0,5 speed and then double the FPS to make it real time speed again. With that only 0,5 of the processor's power is demanded by LFS. You can even go extreme and put the replay on 0,125 and then multiply the FPS by FPS*8.
Read the sticky titled "Making LFS Movies!" which can be found in the movies forum section.