Action! records screen captures, gaming video+audio, and audio. It does not record desktop video.
What I get instead is a black screen with audio recorded properly and my mouse cursor sitting idle (despite me moving it around). The resolution of the desktop "video" is also smaller than any active window I have open. I'm making sure to click on the "Active screen" setting for recording. I've not had any display issues that might interfere with video recording.
My system:
Intel i3-2130
AMD 6850HD
8GB RAM
Windows 8.1
Action 1.20.2.0