If or when you get this error message, another thing to check is “speaker configuration”. To Do this, right click over the loudspeaker icon in the lower right section of the tool bar. Then select and click on “playback devices”. This will open the sound window. Assuming that you want to use “software playthrough”, select “speakers, USB audio CODEC” and set as default. Then, right click over the speaker icon which will open a menu with “configure speakers” at the top. Click on this and “speaker setup” will open. This will enable you to select mono or stereo. Select stereo if you are recording and playing back in stereo. You can then select test, then next, and follow the prompts, then finish. When done, click on OK. Now you should be able to select “software playthrough” and unless there is another problem, everything should work properly. I could not find anything refering to this in any of the setup guides or tutorials or the troubleshooting guide.
First item under “Recording - Troubleshooting” in the Frequently Asked Questions (FAQ):