I also have the exact same error, with hypercam 3
My system is also Windows7 x64 with 8gb ram.
To describe in more detail when i have clicked the record button, after a short duration while i am in another window (roughly one minute)
hypercam will deliver the following error
"video compression failure"
There is no broken video, none appears to be captured at all.
The error seems to occur when hypercam is set to capure fullscreen then has another window maximised ontop of it. When switching back to hypercam (to stop recording!) it crashes the process.
Screenshot attached.