Jing (jingproject.com) is the only free solution I know of. Wasn't exactly what we wanted, so we used Screenflow, which is $99 and Mac only as has been mentioned. It's very easy to use and the editing options are great.

Once you have the video, there's obviously still the decision of how to get it onto your site. After trying a couple different methods, I settled on YouTube. My primary objection to this originally was the video quality, however there is a way to force embedded video to play in either "High Quality" which I found acceptable, or in HD, which is great (and what we ended up using). To do this, you append "&ap=%2526fmt%3D22" for HD or "&ap=%2526fmt%3D18" for high quality onto the back of both links in the YouTube embed code. (more here: http://www.mydigitallife.info/2008/11/20/how-to-embed-and-pl...).

Lastly, we used lightwindow to diplay the video (http://www.stickmanlabs.com/lightwindow/). Just drop some js and css files into your site and follow the following example code (in the case of HD). Mess with the width and height as appropriate.

<a class="lightwindow page-options" title="My Demo" params="lightwindow_width=640,lightwindow_height=385, href="http://www.youtube.com/v/vifE3sBge8k&hl=en&fs=1&...;