Okay, on my older laptop running Vista, I have to use a jumper cable, one of those cables with a 1/8" male plug on both ends.

One end of the jumper plugs into the headphone jack of the pc, the other end into the 'line-in' jack on the pc.

Essentially as the audio is played back, it is then recorded by Audacity.


Try this link for some info:
http://manual.audacityteam.org/man/Tutorial_-_Recording_Computer_Playback_on_Windows#control_panel