This is a feature that a lot of people who liked to record Skype calls, record streaming audio and other various audio recording tasks used when on Windows XP, however upon using Windows Vista you cannot find the "Stereo" / "Line in" option in your Recording Devices.
Many people believed that Microsoft had got rid of it, however it's still there... it's just hidden. Here is how to get it working again.
1) Right click on your volume option down in the system tray and selected "Recording Devices".
You should now see something like this (usually listing your microphone devices).
2) Right click in the white-space and select "Show Disabled Devices".
You should now see a new device usually titled "Stereo Mix". Right click it and select "Enable".
3) Now if you load up your audio recording program (for my example, I'll be using Audacity). Head to the Options / Preferences and change the Recording Device in your audio program to "Stereo Mix".
Now when you have something playing (i.e; like a DVD or something) you can now record what you're hearing on there straight onto your audio program. :)