kozikowski wrote:What-U-Hear is insanely dangerous
Perhaps a little overstated - testing to see if a light socket is live by putting your tongue into it is insanely dangerous. Using What-U-Hear for recording anything other than sounds playing on your computer (such as internet radio) is the least favoured option. If you must use What-U-Hear you should mute all audio inputs that are not in use.
If you are recording what-U-hear and also playback what you are recording at the same time, then What-U-Hear will also record the playback which will cause either feedback (screaming speakers), or at least an unwanted echo/reverberation effect.
To listen to what is being recorded you must set the recording input to Microphone (assuming that you are recording from the microphone input). You can then enable playback for the microphone input. You will need to use headphones or the microphone will also record the playback as well as the thing that you are trying to record and again this can cause feedback. I'm not sure how you set this in Windows 7 (never used it) but in XP/Vista you can double click on a loudspeaker icon (near the Time/Date) to open up the Windows Mixer panel.
Internal microphones are notoriously poor quality on PC laptops (even expensive ones) - they're ok for recording memos, but that's about it. Similarly the microphone inputs on on-board sound cards are invariably low quality and often have various types of noise reduction built in which is good for making internet phone calls, but bad for making decent quality recordings.
You are likely to get much better recording quality if you use a USB microphone, or a USB sound card. However, USB microphones do not usually allow you to listen to what you are recording unless you enable "software playthrough" in Audacity (in Edit menu > Preferences). If you use an external USB sound card that has line level inputs then you can connect your mixing desk to it and monitor directly from the mixing desk. Some USB sound cards also have a headphone socket for monitoring.
Using your mixing desk with a USB sound card is likely to give you the best recording, and it need not be expensive - USB sound cards start at around $40.
If you get a USB sound card (or a USB microphone) make sure that it says that it is Windows 7 compatible - there have been reports that some sound cards that work with Vista do not work with Windows 7.