Computer Sound Card Wont Record?

It sounds like you are trying to make your sound card perform both record and playback simultaneously. In most cases an on-board chipset (AC97, Realtek, etc.)... I don't think it can handle it. You could try running an 1/8 TRS - 1/8 TRS cable from stereo out to mic in..... But I don't think that will work for you as the mic input will not be stereo. I am not familiar with Audacity, but in Pro Tools, Cubase, etc., you can mixdown your sessions. I'm sure that Audacity performs the same way. Though I don't think it will let you modify the 'session'(mixdown) in realtime. You could try outputting it to a second host such as Wavelab, using it as a 2 Trk master. Good luck.