If you were on Win7, I’d know exactly where to put you, but you’re not.
In any event, just to cover the bases, the common thread through this problem is you’re using speakers. That’s expressly forbidden while you’re overdubbing because of the almost certain contamination between the playback tracks and the recorded ones. Try all this with headphones/earbuds.
Also you missed a step – or you missed writing about it. Can you play the first track? At all? Under any conditions?
using the mic and internal speakers of my Laptop
Which is a what? How new is it?
Do you use Skype? Do you like recording internet audio/music?
If you switched between MME and Windows DirectSound in Audacity, this only changes the protocols with which your sound device communicates with Windows. It would be better if you have not already done so to check if you have the latest audio drivers for your Thinkpad here: http://support.lenovo.com/en_GB/downloads/default.page .
I am using Lenovo G570 and Windows 7. I downloaded Audacity 2 recently. I am using a synthesizer for recording. My first track records fine. (with drums). When I try to record the next track with Overdub, the second track recording is discontinuous. If there is a silence zone or low volume zone on track 1, then the second track records fine. Please suggest a solution.