Fraps takes whatever you activated to record from in your windows sound settings... You have to check "wave" there iirc, otherwise it records the sounds from your mic or wherever...
Uhh, Niko, just as a test, if you have a simple 3.5mm to 3.5mm cable, have you tried creating a loop back by plugging that into your speakers and Line-In, and then recording from that? That's what I haffto do on my iMac (No StereoMix), and it works. Apparently it also gives both channels as sound, rather than StereoMix which mixes them into 1 channel.