There comes a time in all of our lives when we need to record a sound within our PC, whether it be from an application or from a web stream. Ok maybe not everyone has to do this.. but some of us. Often there's a way of grabbing the audio either by finding the clip within application files or if it's web-based, by manipulating the address or by using a media locator/downloader. Sometimes that's not possible, or even if it is you might be trying to create a brand new wave file with native specs. Well, if you've ever been in this situation then I'm guessing you already understand DAW applications (sound recorders, audio post-production software, whatever) but the one thing that usually stumps people is how to set up the PC's sound, so that's what I'll explain. Assuming you have a typical sound card...!

The principal is: The computer is asking the sound card to turn digital audio into analogue sound via its output function. You want to send the audio back through the input function of the card, therefore you need to tell the input to listen to what is going on across the board. Simple. Go via Control Panel, into your audio properties and take a look at this screenshot.
I'll list what to do: (1) Go into advanced settings, (2) go Options > Properties. (3) Select your 'input' in the drop down box. Make sure STEREO MIX is ticked. Click OK, then (4) Make sure stereo mix's mute is unticked.

This should then enable you to record. Depending on what application you are using, you may need to switch input to stereo mix/monitor mix, etc. You might get clipping in your recording. If so you might be able to trim the stereo mix recording level in the 4th screen.

This process will not work if you have more professional hardware fitted, but actually should be a little easier to achieve. Just open your hardware's control panel and take a look (M-audio software usually gives you an icon in the system tray next to the clock). The key feature is the stereo mix/monitor mix. This is the bit that describes everything that is passing through the 'output' stage of your sound card.