Let me first describe the situation I am dealing with. I am an amateur musician playing an old Casio CTK-591 keyboard with a single headphones output. I use that output to connect it with my computer with a jack cable (as the line-in). To the other socket in my PC I plug in a simple VOIP microphone. The last computer socket that I use is output for headphones, so I could here my keyboard while recording.
Previously I used Windows XP and I had no problem with recording both the keyboard and my singing voice. I only ticked off both the devices I wanted to record (mic and line-in) and I could independently set up their volume level and recording sound level. Usually I muted the mic so I didn't hear it while recording, because hearing my echoing voice in the headphones was really distracting and annoying. So I was only listening to my keyboard in the headphones and I was very happy with that solution.
But here came Windows 8.1 and ruined everything I had