That does it, i'll explain right here once and for all the ridiculous way to get Game Cam working for VC and LC - bit daft, but here goes.
To make it work when launching it from the Game Cam icon, let the game load and then go to display options. Change the screen resolution size to anything different from what it currently is - let the change take place and Game Cam should be working, the video-box in the bottom-right and everything. Change resolution back to what it normally was and start recording some kick-arse stunts!
It's worth all that hassle when Fraps lets you down