Currently in windows Vista unless you have a quality sound card with nice drivers, you can't record from the "audio out" at all, only from the microphone.
The utility that would be useful here would be something like a "virtual audio cable" that takes the input from stdout and redirects it to a new device that *can* be recorded to.
That's version 1 (which is already good)
Related is the existing "virtual audio cable" project, but they want $9000 for their source, and I wouldn't be able to release it, and it's built on the "older" miniport stuff, so hence this here...
Also missing from windows is the ability to *combine* audio devices to record from (ex: audio out and microphone together).
That's version 2, worth a tidge more.
http://www.shiningmorning.com/VirtualAudioStreaming/index.html is an example