use looped connection mic/earphone to record?

Good morning
I am relatively new to this but have successfully recorded and burned to CD some old 78rpm disc music using my old record deck and amplifier. I am using Windows 7 Pro and have just installed Audacity v2 (from beta 1.3) and now want to record music via ‘Spotify’. I’m wondering whether it might be possibleto create a wired loop on my laptop between the mic and earphone sockets to facilitate this? My gut feeling is that this would not work as the sound card may not be able to operate ‘in both directions’ at the same time. Also, it’s far too easy to be do’able!
Any helpful comments would be much appreciated, thanks.

See this tutorial in the manual: