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Can anyone recommend suitable software (preferably free/cheap) for such a task? Something which records everything on a screen (for later playback).
It would also be great if it could record sound (and even video from a webcam attached to a pc) at the same time.
However, an Intel Mac, running VMWare Fusion, or Parallels Desktop, is an ideal Usability test platform.
You can use either ScreenFlow or Silverback as a Mac-based recorder, and it will record, even if you have VMWare set as whole screen (rendering the Mac an effective Windows machine).