Apparently in Vista the only default recoding input devices are Microphone and Line In which would mean that you can't record a sound played on your computer.

To enable additional inputs, log in to your computer with elevated administrator rights and follow these steps.

In the Control Panel Classic View click Sound.

In the Standard View click Hardware and Sound.

Right click on a white space and select Show Disabled Devices from the pop-up menu.

Now you should see all the devices available.
Right click and select Enable for each device that you want to use.

To record sounds being played through a media player select the Stereo Mix control...

Click the Set Default button

You will have to change the default to use other devices as your input source.