Our first reaction is to get you to stop using Audacity 1.2.
Audacity 1.2 is very old and no longer supported,
patched, corrected, or updated. Audacity 1.2 can
be unstable on newer computers.
Download and install the latest Audacity 1.3 from here...
http://audacityteam.org/download/
You can install both audacity 1.2 and Audacity 1.3 on
the same computer, but only use one at a time.
Audacity 1.2 will not open projects made on Audacity 1.3.
If you use MP3 or some of the more modern audio
compression formats, get Lame and FFMpeg software
from the same web site. Do not use older software
or software from other web sites, even though they
may have the same names.
Then, after you clean that up, Audacity doesn't do real-time effects, so if you load a sound file in Audacity (and it's a type that Audacity recognizes) playing it will show you what's there.
Or it will play the work out to the computer. If the computer doesn't see fit to present the work to the speakers, there isn't much we can do about that. That's a common fault when somebody plugs a USB sound device into a computer. It scrambles the device management.
Then there's the speakers. You can't mix or do audio production without being able to hear what you're doing. If you have "computer speakers," you're probably not going to do a very good job of sweetening your performance audio. If for no other good reason, you won't be able to tell when it's sour.
We usually tell people to go for a nice pair of headphones over a ratty speaker system.
Koz