You can find the official Optifine release here

Also, I've removed the Realtek HD Audio solution from the answer, since that has nothing to do with your video codecs. Excuse my silliness; I haven't had much sleep.

I believe Camtasia Studio depends on the same MPEG decoders as FRAPS, so I believe fixing any issues with your video drivers. As for the microphone audio, I found this tutorial which may be of help:

On a related note , the coming 1.3 patch will add low chance of zombie pigmen spawning near nether portals.

@John As far as I can tell, the only changes to villagers from 1.2.3 to 1.2.5 was an improvement in villager door detection (which was causing people to get horrendous villager numbers). The definition of a "house" has not changed. Designs I used in 1.2.3 still work even in the 1.3 snapshots.

Sorry, I didn't word that very well. When Minecraft searches for nearby iron golems, to determine whether it can spawn a new one, it does not check lower than 4 blocks below the village. If an iron golem is 5 blocks below your lowest house, it will not contribute toward the iron golem limit.