I have a Dell N5110 with an IDT High Definition Sound Card. Windows 7.
I'm using a microphone in the line in jack and headphone (NOT USB) in the headphone jack. So both mic and headphones are plugged directly into the sound card through mini jacks on the laptop.
The drivers are up to date. The device is working properly.
The Audacity settings look fine. Input is Microphone/Line In and output is Speakers / Headphones IDT.
Under Preferences; Recording I have Overdub checked because that's the only way to hear the previous tracks while recording new ones.
My guess is that this can't be solved with this configuration/ computer, that it has something to do with the sound card and I just need to use a different computer to record music, but before I give up I thought I'd put it out here. Namely because I do not have another computer
I may try to use USB headphones and see if that solves it, but I'm broke and I've know idea how much those cost.