Please open up the WMC7 Settings and click on Audio Setup. Turn off Auto Detect. Select the Audio Recording Sources pulldown. From this listing, you should see all of the available audio sources from which you can record. In order to record audio from programs on your computer, such as from your browser, you will need to select “Stereo Mix”.
If Stereo Mix is not listed, it is sometimes disabled by computer manufacturers. Right-click on the speaker icon in your system tray and choose “Recording devices”. From the Windows recording device listing, right-click in the listing and choose “Show Disabled Devices”. If Stereo Mix appears, you can then enable it.
Go back to the WMC7 Audio Setup window, and when you click on the Audio Recording Sources pulldown, Stereo Mix should appear.