It is laggy as in FPS. However, I found a program called "Game Booster 3" which when switched to "Gaming mode" basically shuts down all the useless things on your computer to focus the computer on the game. This helped a bit but when I record my gameplay it strains my PC a bit. I suppose I can deal with it.
you using FRAPS? now i havent worked with it in a long time, but back in the day (when i was rocking Dial-up and an Athlon XP) FRAPS used to just kill my frame rates (I used to try and capture my epic battles in PlanetSide or Asheron's Call).
one of the first things i do too, is open the MSCONFIG, and under start up, turn off everything but the bare essentials. some say to go into services as well and turn stuff off, but unless you know for sure what it is, i wouldnt mess with services too much... wrong thing and you get headaches and need to go to a restore point if thats turned on.
give us specs, or make n model atleast and ill see if theres more that i can help ya with.