Hi Steve,
This week marks my first attempt and merging audio and video from two sources and then editing them into a completed video. I've still got a lot to learn but I think it's going to be my way forward.
I'm running a Mac. For the audio I use an Apogee Jam into Garageband. For the video I just use the built in camera in my mac recording though the Photo Booth app. You can checkout my latest go at this on the "If I Had You" Soloing lesson. I recorded my own rhythm backing track and then did a solo over it. I export the video into a .mov file and then export the audio from GarageBand into an mp3. I import those into iMovie, sync up the two and edit (trim) the start and finish. I then export the finished video into a .mov file that I can upload to SJ.
I also have an audio capture app (Audio Hijack) that I use to capture Duke's backing tracks as mp3 files. I can then import them into Garageband and play along with them. The benefit is that I can mix levels in Garageband, do silent recording and have a full range of amps and effects models to pick from.
It sounds complicated but once you do it a few times it goes together pretty quick. After messing around with a bunch of other methods this one seems to work the best for me and as a bonus all of the apps I use are free or come with the mac (other than the audio interface) so if you have a mac it's affordable. I'm sure there are similar (or better) options on a PC based system.
Regards, Marty