I went on a whole 2-day search for local-multi games to play with my girlfriend, and on PC I feel it's like a thing that's only getting some good attention NOW, so my guess better games are still being developed. In other words, don't feel weird if you can't find much good stuff.
The best ones which we spend most time in is
Rocket League and
Towerfall. You should seriously try both, but Towerfall has a learning curve (it's supposed to be hard, and DAMN HARD on harder modes) so I'm not sure I'd recommend it for a 5 year old. Definitely worth a try though.
There's also
Sky Rogue, which she didn't like, but I love, and I strongly suggest it because one of the first games I played when becoming a conscious human being was Ace Combat.
I believe I tried almost all the other games in the thread, and in order of popularity/success between me and gf: Battleblock Theater, Lovers in a Dangerous Spacetime, Worms, Gang Beasts, Crypt of the Necrodancer.
On a side note, as a PC Master Race guy I easily praise consoles as they are still the local co-op kings.
Regarding recording, I think Bandicam is okay, along with Handbrake for compression. I rarely record/edit, and it's usually quick, not very involved videos.
Here.
E: On Fraps, it's not ideal nowadays as PCs can run games and compress videos a bit, at the same time. And I've had many issues with Fraps with certain games, it would kill my FPS or would make the game stutter. I was running on a +3 year old GPU when that happened, but all in all..Fraps doesn't seem that great anymore, unless you want uncompressed, crystal-clear video.
I just use bandicam because it's the first thing that came up on Google Search, but I always find it's quality to be a bit meh sometimes. Might have do with the fact that I'm too lazy to fine tune presets and just use those that sound good (or copy some preset that seems reasonable from the internet). Same thing applies to editing software, which I'm too lazy to fine tune.