Is this hd bottle necking my system?

Dog drops; I just lost a long reply.

Did you search the web? I see a number of posts about skyrim with fraps being slower than skyrim without.

While the issue might lie in the additional CPU load running both, I suspect that it's a fairly simple limitation. The graphics card is receiving an enormous amount of data every second. That's why they go in x16 PCI-e slots. The card outputs a slightly more enormous amount of data to the graphics display.

When you run without recording, the only links involved are the PCI-e and the video cable. If you try to record, you are trying to stuff that enormous amount of data through an HDD-sized pipe. No HDD can do that.

If fraps has an option to reduce resolution drastically, you might try that. If you have or can borrow a good SSD, try saving to that and see if the frame rate increases. The fault probably does not lie in your particular HDD, but in trying to put 50 gallons of water in a 20 gallon jug.

EDIT: This person seemed happy at the end: http://www.ladymoiraine.com/forum/index.php?topic=3497.0