WASAPI loopback input records microphone audio instead of system playback

Audacity 4
1

WASAPI loopback recording does not work correctly in Audacity 4.

Even when I select the WASAPI loopback input, Audacity seems to ignore that selection and records from the device microphone instead.

Expected behavior:
The selected loopback input should record system playback audio.

Actual behavior:
The recording uses the device microphone instead of the selected loopback input.

2

Cannot reproduce.

Windows 10, WASAPI, Audacity 4 (nightly build).

As you can see from my screenshot, the song playing in the background is being recorded into Audacity.

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