SOLUTION for everyone missing the Stereo Mix feature.
I've have been following this topic for 2 years and finally found something that works. Go to CNET and download
Freecorder.
It's pretty basic but works in Windows 7 anyway for me.
It only has a small window saying "listening" that stays open until you start say a song on a web radio station, then it will change to "Recording" When the song is finished, you hover over the small window and "stop recording" appears and you click it. Before you do all this, find the settings program in the start/all programs area and change the file destination to what you want.
The only bad thing is the file name is the date/time of the recording so you need to rename it....but at least it seems to work for me ok with good quality.