did you lower stereo mix?
cause you're lowering your standard volume won't do the trick.
Start -> Control Panel -> Sounds and Audio
Voice Tab and Audio Tab (Check the volume, just play around with it)
I think it should be the voice tab
Already messed around with my sound settings. No luck before, no luck after.
And I didn't get Fraps 3.2.2 cause I'm "cheap". For a long time, I had 2.9.6 and it ran fine until now.
On another note, I used to have dBpowerAMP Music Converter 11.5 & GoldWave 2.5 installed when I was messing around with playing sounds over the microphone for Steam games. Whether it altered a sound driver that I haven't noticed, who knows.