After installing Windows 7, the Stereo Mix option disappeared for my onboard sound card Intel DG965SS.
Microsoft Driver works fine for playing audio, but no Stereo Mix / Wave-Out Mix option is available.
I've tried to download the latest audio driver from Intel. The problem is that not only Misrosoft, but also Intel doesn't really care about its customers. The latest audio driver available from Intel works on Windows XP and Vista only.
I've tried to install the Vista compatible driver:
AUD_allOS_D20001.0x_PV_IDTGUI_v105_Legacy_Win Vista and XP.exe
It adds stereo mix to the system. The problem is that it doesn't support the 5.1 mode, only the stereo mode is available.
I tried to download
IDT_Sigmatel Audio_AUD_allXP_5.10.5258_v178_PV_IDT.exe
Despite the fact that it is compatible with Windows XP only, I didn't have any problem installing the driver. The stereo mix works, but the problem is that the sound card works in stereo mode only, not 5.1 mode available.
After installing IDT_Sigmatel Audio_AUD_allXP_5.10.5258_v178_PV_IDT.exe , I tried to go to the Device Manager and update the audio driver to the one from the WDM folder of AUD_allOS_D20001.0x_PV_IDTGUI_v105_Legacy_Win Vista and XP. This allowed to enable the 5.1 mode. the stereo mix was available, but the problem is that the stereo mix allows to record mono audio only.
The best solution seems to be to use AUD_allOS_D20001.0x_PV_IDTGUI_v105_Legacy_Win Vista and XP.exe as mentioned in the following thread:
How to install IDT 92xx sound card drive in Windows 7