The banding issue is probably the result of using too low a "color depth".
To change the color depth of your recording, open the Settings window, and switch to the Performance tab. In the Color quality while recording drop-down list, select 32.
You may have to increase the color depth of your Windows display settings as well. In Windows Vista, right-click on an empty part of the Desktop and choose Personalize, then click Display in the Control Panel/Personalization window. On the Monitor tab, open the Colors drop-down list and choose Highest.
In Windows XP, right-click on an empty part of the Desktop and choose Properties. Switch to the Settings tab. Set Color Quality to at least 32 bit.