Mixing microphone and system sound using usb headset

I have a Sennheiser usb headset. I want record sound I’m playing via VLC mixed with my voice through the headset microphone. I’m finding it very difficult to get a reasonable balance between the two. The nearest I’ve come is to turn the microphone recording level very low in the mixing toolbar, and the speaker level very high. That makes it so loud that it is very uncomfortable to listen to. Also, the recorded signal, both from VLC and the microphone is very low. Any advice would be much appreciated.

It’s the wrong way to do it, not just because of the volume problem, but because you will get a poor quality microphone recording of the backing track. You could instead play the headset mic through the headset and record playback, but because you are using a USB headset there is no way to play through without delay. Your voice would be recorded late and you would hear an echo of yourself in the headset.

This is the proper way to do it. Record the VLC playback ( Tutorial - Recording Computer Playback on Windows ) then overdub record your performance against the recorded track. That way, your performance can be separately edited from the backing track. Set the Audacity playback and recording devices to the headset. Hold one earpiece very slightly off your ear so you can hear your voice acoustically without delay.