I have the same issue as well. As of recently, possibly with a Windows 8.1 Update on 7/15/15, my Audacity software does not work properly anymore. When I try to record any musical audio input from any website or external source, I get a very loud feedback laid on top of the track. Also, I get an echo on a conversational audio that comes back if I lower the recording volume to less than 40% to remove the loud continuous feedback noise. I tried to restore my Windows Update with the help of Dell prior to when Audacity was not working properly, and the system and Windows deemed those updates as critical so I could not restore to when Audacity was working properly. I even uninstalled and reinstalled the latest version of Audacity and it made no difference. Obviously, there is a conflict going on since it is a software issue and doesn’t seem to be related to any internet or connectivity issue. All inputs into Audacity were affected equally.
I would love to continue to use Audacity. I think there is an issue that many of us have started seeing all of a sudden using Windows starting this week.
Any assistance or thoughts or upgrade patch would be appreciated.