Microsoft has severely restricted your ability to record audio in 7/Vista compared to previous versions of Windows. This page details information you may need in order to get your software product work in Windows 7/Vista.
How to enable an audio recording line in Windows 7/Vista:
Windows 7/Vista made some major changes to audio controls which negatively impact the users ability to record from the sound card. The ability to record from the sound card will be dependent on your system's sound card and drivers. It is important to make sure that you have the latest drivers installed for your sound card. Install the latest drivers before proceeding with these steps.
On some systems you may be able to enable a recording device as follows:
Open Control Panel
In classic view, go to Sound
Go to the Recording tab.
If you only see "microphone" and/or "line-in", right-click anywhere in the blank white area of the window to display the Show Disabled Devices context menu. Select Show Disabled Devices
If Stereo Mix, Wave-Out Mix, Wave, What U Hear, or something similar appears, right click on that entry and choose Enable:
Click OK - In the case of the example above, we have just enabled the "Stereo Mix" recording device. Keep in mind this is dependent upon your sound card hardware and drivers. You may or may not have this line available.
To make this newly enabled device the default recording device, highlight it and click the Set Default button, or right-click on the device and select Set as Default Device
If you were able to successfully enable a recording line, select the appropriate audio device as audio source prior to recording.