Help recording audio directly from computer?

I'm trying to record sounds directly from my computer (such as from a game) and I can't get it to work regardless of the tool I use. I know about enabling stereo mix in vista, but I only have wave out mix if that makes any difference. I've already enabled and tested it and it does work... but not when I have my USB -> headphones/microphone jack plugged in. My laptop had a faulty headphone jack port so I had to buy this if I wanted to use headphones. I don't understand why I can record using wave out mix in Audacity (and presumably Cam Studio) when its not plugged in but when it is plugged in it doesn't work. Any ideas or possible solutions? I'll also add that Fraps does record the audio from the computer like I want it to, with the sound device just being labeled 'Vista' oddly, but I don't really want to use Fraps unless there's a way to just have it record audio. I've tried the Ask & Record toolbar, but that doesn't install correctly for me for firefox so I'd also like that to not be a suggestion if possible.