A free tool for grabbing screen action and a website (YouTube like) for publishing vids. http://wegame.com/ - can store to hard drive for making machinima or upload directly. Great for quick screen grabs but uncertain at present about making machinima.
The Straad Players use Second Life to produce Machinima but there are other engines with different pros and cons. There are some purpose built engines for Machinima and these can be found in the tool category. (click read more)