I am using a laptop Windows 7 64 byte machine. No problems on my XP PC (as usual), but I find on the laptop that although I can save, the source always seems to be via the loudspeaker-micrrophone, instead of directly through the audio card (Realtek). I attach an image of Audacity in action.
Note: I live in France, and the Audacity text shown is French.
Help!!
The way I understand Windows does it, the Realtek is the manager of the microphone and the other analog services/devices, so what you have is perfectly normal.
In order to record What’s Playing On The Computer, you have to record from a “fake” audio device such as Stereo-Mix or What-U-Hear. That’s a non-hardware (you can’t touch it) software construction that turns around the playback part of the sound card and puts that show on the record side so Audacity can see (hear) it.
http://manual.audacityteam.org/o/man/tutorial_recording_audio_playing_on_the_computer.html
Koz