After specifically requesting Windows 7, Best Buy upgraded my new computer with Windows 8, from which the “stereo mix” option is apparently missing even after you go through the process for enabling disabled recording devices. The computer’s manufacturer suggested a work around, requiring only about $20 worth of audio cable and adapter equipment from Radio Shack.
You will need a stereo male-to-male audio cable, with which to connect the 1/8 inch headphone jack to the 1/8 inch microphone jack. Audacity then picks up the computer’s internal audio as if it is coming from an external microphone. All you need do is access the drop-down box where you would ordinarily select “stereo mix” and select the microphone instead.
If you need to monitor what is being recorded (plugging the audio cable into the headphone jack kills the sound from the computer’s external speakers just as it would if you were plugging in headphones), just get a stereo-male-to-stereo-female “Y” adapter, which splits the audio coming out of the headphone jack into both the microphone jack (as already described above) and also to your headphones.
Especially as concerns the “Y” adapter, be sure you are getting the “stereo male to stereo female” if you want to record in stereo.
Don’t know whether the sound quality obtained through this method is optimal, but for the stuff I am doing (I do a radio news report featuring commentary from newsmakers, experts, pundits, etc.), the sound quality is often poor anyway due to the speaker being on Skype, outdoors or whatever. Might not work so well if I was snatching music, but for my purposes it seems to work just fine.
Maybe $3 or $4 if you want the heavy-duty Monoprice cables.