How to improve my machine...

Welcome to Tom's Hardware Forums,
FRAPS benefits from the following things, fast CPU, dedicated hard drive, good graphics. You have good graphics so we'll go over what will help your recording sessions
1) Defrag your hard drive before beginning your session
2) Use a dedicated HDD for recording
3) Close any programs other than those needed (antivirus, chat, gadgets, etc...)
4) Overclock
My first upgrade would be the dedicated hard drive.
Second upgrade would be a CPU cooler - to overclock CPU
Last upgrade would be an additional 550ti in SLI (which will probably help the least)
Hope it helps

For the dedicated hard drive, you don't mean separating into partitions, right? I actually need another physical hard drive to setup for this?

Yep, another hard drive, not a partition. Since FRAPS will constantly be writing to the hard drive, you don't want it to have to compete with other programs which are reading and/or writing to the drive also

For the CPU cooler, what would you recommend? I'm not 100% sure what I'm looking for on that one either. : /

There are a variety of good aftermarket coolers from inexpensive air coolers like the CoolerMaster Hyper 212EVO for about $30, very popular due to it's cost/value but it is large so case size is a consideration there, up to water cooling systems costing $100 and up.
What case are you working with here? If prebuilt, what model and is it slim or normal design or somewhere in between?

It's a Gateway prebuilt and is normal design. I'm not sure of the exact model, but here is an image of what it is similar to: http://0.tqn.com/d/compreviews/1/G/z/M/GatewaySX-200.jp... (Looks like maybe this is the model number: Gateway's SX2801-11e)

Also, I have an old 1TB hard drive, how would I be able to set this one up to run as a second hard drive? It has a lot of old information on it, none of it of value -- but it's currently running on vista whereas this system is on win 7.

Thanks for your help!

The Noctua NH-L12 is one of the top of the line low-profile air coolers but at $70, it is expensive. So, another highly rated but less expensive option might be the COOLER MASTER GeminII S524 for $40
Just a few options I think will fit your case
Is your old hard drive SATA or IDE?

The Noctua NH-L12 looks like it should do the trick. Plus, everyone's mentioning the easy installation -- So that's a bonus for me.

The old hard drive is a SATA hard drive.

Once again, thanks for the incredibly helpful feedback.

You'll want to format the HDD unless there is data on it you want to keep. In which case copy the data onto CD or flash then format the old hard drive (NTFS and not FAT32) - single partition, you should be good

Perfect.

Once again, thanks for your help. This should all work easily.