Here is a handy pdf file which explains one way to record and compress video from NWN using FRAPS and VDUB.
Now, if you happen to have x-fire installed on your system, you can search for the file xfencoder.exe and run that. It's quite a bit easier to compress a large recording that way (it's a simple GUI) but your mileage may vary when it comes to the bitrate (i.e. quality) of the resulting compressed video.