I had the exact same problem on my XP system with onboard ALC883 Realtek audio using driver v.2.08. It simply wouldn't record sound with
Audacity, so I tried
Ask & Record Toolbar,
Replay Music and
Replay AV from Applian and they work fine even if I disable my sound card completely.
If you're like me and you don't want to search for drivers, buy cables or sound cards with the "Stereo Mix" / "Wave Out Mix", then try this.
Hope this helps.
Thank you!