The Application audio recording method requires Secure Boot to be disabled on Windows 8 or greater systems.
The benefit of the Application recording mode is that each audio source can be isolated, providing a clean recording.
You can still recording in Stereo Mix capture mode without disabling Secure Boot, but then the recordings might overlap with other audio playing on your computer, such as system sounds. You will need to be careful to turn off system sounds and not have any other audio play during a recording.
Please read https://docs.microsoft.com/en-us/windows-hardware/manufacture/desktop/disabling-secure-boot so you are fully aware of what secureboot does and what disabling it entails.
You might want to print out these instructions or have them open on a mobile/secondary device since disabling Secure Boot involves restarting your computer. You might also want to bookmark this page to return to after disabling Secure Boot.
Press the Windows key + C, or (if you have a touchscreen) swipe in from the right edge of the screen to open your Charms.
Click Settings.
Click Change PC Settings.
In PC Settings, select Update and Recovery.
In the Update and Recovery screen, click Recovery at the left.
Under Advanced Startup, click Restart now. The system will restart and show the Windows 8 boot menu.
In the boot menu, select Troubleshoot.
In the Troubleshoot menu, select Advanced options.
In the Advanced options menu, select UEFI Firmware Settings.
Click Restart button to boot into UEFI BIOS Setup screen.
Each manufacturer lays out the BIOS differently. Look through the BIOS settings and disable Secure Boot. Save settings and exit.
Here is a video walking through the steps: http://www.youtube.com/watch?v=XZcYbxOcPV0
Once Secure Boot is turned off, you will be able to use the Applications recording method to get clean audio recordings.