Just found this discussion after fixing the problem being fretted over.
Hope this post isn't too late to help.
I too got a new computer loaded with Vista and a Realtek sound card.
Two of my most-used programs are Cool Edit 2000 and the Amazing Slow
Downer. I use them to learn tunes and tricks on my mandolin.
Unfortunately, both programs didn't work right with the computer "out
of the box".
I'd get the device error like you've been getting.
The problem wasn't Vista at all. The sound card had never had the
"Stereo Mix" turned on.
Simply right-click on the speaker icon in your toolbar. Choose
"Recording Devices".
More right-clicking.... Pick "Show Disabled Devices". Viola! Stereo Mix
appears.
Right-click on it again and choose "Enable". You're set!
Should you need to adjust the levels, right-click on Stereo Mix again
and choose Properties. Click on the tab "Levels" and adjust to suit your
needs.
Hope this post helps someone keep their cool (edit!).


--
Poindexter