When I record Video Demo with Captivate 7 the drop down menus on the website I capture do not work

I can confirm that this is still the case for Captivate 2019 (11.0.1.266), on MacOS, recording a Safari browser. Recording the browser on a primary screen solves the issue. I logged a bug.

Can you let me know what type of Web software you are using

Turns out it was because I was screen capturing my second monitor.  When I capture the primary monitor it works fine.

I have noticed this issue when the software that is being recorded is installed on virtual machine.

In my case it was due the configuration of the host system (the one on which Captivate is installed). Since upgrading the system was out of question, I had to take a screenshot separately and inserting it as a background in Captivate. It is the best way, such slides quality may even a bit different than the "recorded" slides, but that was only to go for me. Only saving grace was that I had very few such instances.

Captivate is a RAM-hungry software. As far as possible, make sure that you don't run any application along with it.

Sreekanth