Capturing Audio Question

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If you go into Sound & Audio Devices in Control Panel what is your default device for Sound Recording in the Audio Tab ?
It should be something like SBLive [D 400} - if the driver is correctly installed then there should be an activated volume button - click on this and make sure the correct device for recording is set - it could be set to record the midi synth etc instead of the line or mic.
If this doesn't work try uninstalling all sound card related drivers - reboot - and then re-install
Good luck !