Error message trying to record on Windows8

I am getting the error message “Error while opening sound device. Please check the input device settings and the project sample rate”.

I am on a new processor running Windows8. I have installed Lame (not sure where to look at to see if successful). I am on the following settings: Windows WASAPI; Speaker-Realtek Digital Output (only option); microphone- Realtek Digital Output (only option); 2 (Stero) Input Channel; Project Rate – 44100.
This setup worked on Widow 7 system. What am I doing wrong?

http://manual.audacityteam.org/o/man/faq_errors.html#sound_device

Koz