The latest patch knocked Fraps out for me too. Fraps runs through the menu's, but not when I actually launch the 3D part of the game. Full screen, Psuedo and even Windowed modes make no difference.
Have currently rolled back to the Fraps compatible beta patch that was released earlier in the week and am keeping Steam in off-line mode so it doesn't try to download and re-install the latest patch. Is a bit of a compromise though. Not a viable long term solution.
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