I think what's probably up here is what you've chosen for your recording options under your sound card.

If you go to the control panel - select sound and audio devices - then click volume to bring up the play control (the mixer screen)- go to options - properties and select recording and click ok - this'll let you see what your sound card will record.

I'm guessing just now you probably have "What you hear" or "Wave" selected - decheck them and select only the input of where you are trying to record from- line in or mic in - whatever. You should now only recording from that source whilst being able to play back what you have previously recorded.

The fact that you can record and play back already suggests that your sound card should be capable of this.

If that doesn't work then do post up and I'll have a look at my version.

best of luck.