I have recently being 'playing' with Microsoft Learning Content Development System (LCDS) a free tool from Microsoft for developing interactive on-line material. The case study was research methods for an MSc Computing course.
By no means have I looked at all the features, but there are some nice features I have looked at like the ability to produce interactive tables only revealing a topic at a time, or the ability to embed questions inside the 'course'
It is SCORM compliant so does fit within some VLEs such as backboard fairly easily.
Problems? It does not work with Google Chrome, but is fine with Firefox and Internet Explorer (not entirely surprising). Personally I find the font size used too small, it is alright when viewed on a monitor but when it is projected it is too difficult to read.
Are there features I have missed? Yes, there are lots of features at the moment I have only used those features I want at the time and it would be worth exploring others further.
Why not using Xerte? No reason, Xerte is another option and is worth considering - i just haven't done it yet.
LCDS is fairly intuitive, easy to use and free, but doesn't work well on all browsers and not easily customisable.