Forget the Windows "sound recorder," it will only allow you to record for a limited time (I think 60 seconds).
I use MusicMatch to record live streams from the net. When running MM, under settings set the "source" to your sound cards "input." You will also need to buy (Radio Shack) a 1/8 stereo phono plug (Male/Male). From the sound card, run the output to the input. As an option, get a Y-adapter for your output lead (1 male/2 female).
NOTE: In order to do this, you need a Full-Duplex sound card (like the Sound Blaster LIVE!)
--- EDIT ---
Make sure it's to the "input" lead, NOT the "microphone" in lead.