there are applications which will allow you to capture directx movies (HyperSnap DX) but I doubt you'll be able to run that and the game at any acceptable speed. Perhaps with 2 harddrives, a hellovalot of ram and dual processors but the tv out to tv in is the only really viable option.
like nick said the way u do it for best quality is with a decent capture card on another pc capturing what you do on your pc (and you have a gf2/3/4 with tv-out - use s-video if you have it - better qual).
You can also do it with 1 pc and a spare video recorder but not as good quality (altho still pretty acceptable) - just bung ur vid recorder into your tv out and record what you do onto vhs then capture it back afterwards
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