How do I fix the device stay in red and won't allow me to record in PC free mode?

Actually, there are two reasons that the device keeps in red light in PC free mode, the first one could be the input source with HDCP protection and you can check or disable the HDCP, an apps might cause the problem before you reboot the game console. The second one could be the SD card problem for your reference. In order to record in PC Free mode please check and confirm the following steps: 
1. Download and install the latest firmware for your device (make sure to use correspondent firmware, download only from AVerMedia official product page)
2. Use Class type 10 micro SD card formatted into FAT32 or exFAT
3. Check and confirm whether the input source has HDCP protection on it*
4. Do not use a partitioned file system in the SD card.
5. Try to lower the allocation unit size of the SD card.