Did you install Skype? Do you have Vista? Did you mute your mic in Skype?
Was I able to record audio in Audacity this morning? No!
After reinstalling my Sigmatel audio drivers I noticed Skype was able to read my mic. So after I disabled the Exclusive Mode my Audacity was yet again ready to be used. It only took me half a day. Thanks Vista for hiding these options from the tasktray icon 
PS. sndrec32.exe still seems to not be working …
Note to the developers: Less is more. I do not want to click around. I want it to work. I do not care about the details. If I click record, please do troubleshoot any issues on behalf of the user [me].
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