Hi, Jon-
That's exactly what I did with Windows Vista, and it worked fine. I tried it with Windows Vista and Audacity and everything looks fine on Audacity screen - but I don't get a signal when I try to record.

On the Audacity Device Toolbar toward the top of my screen, there's a little microphone icon. To the right of that, I have selected "stereo mix." To the right of that, I have selected "2 stereo input channels." I think those two should be the proper settings for input.

But when I try to record, nothing.

-Joe-