Ah I use a different method...
(I know its for Mac, but the steps are similar for PC's)
I downloaded
"Screen Movie Recorder" Which as it says, records the screen. I find this more effective for me in animations, and makes it the quality of the clips play at normal speed.
First you press
"Start Recording"
Drag and select part of the screen you want to record. It will automatically start recording once you have selected the part of the screen.
When done press
"Stop Recording". It will then save the file in your chosen format, for me ".MOV"
In Photoshop Press
File/Import/Video Frames To Layers.
Select the chosen file.
Select The part of the video you want, and DON'T Click
"Limit To Every Two Frames" and click OK.
Crop it, Resize It and Add desired effect text/border.
Then Save by going
File/Save For Web Devices/Save.
Hope this helps anyone. It should be the same for any other platforms, as long as you use Photoshop. It doesn't have to be Photoshop CS3 Extended.