audacity.sourceforge.net has nearly reached the level of sophistication equivalent
to CoolEdit Pro

I've read the FAQs on the Audacity website and it's supposed to be capable of recording audio playing on the PC. However I simply cannot figure out how to go about changing the Input-Source. Does anyone know how to do this?

the answer is simple, Cheat!
 
Go out to radio shack if you don't have the right cord, - the one with the headphone-like-jack at each end, and run it from the speaker output to the speaker input. If you have a good soundcard it will have two outputs and so you can still have your speakers hooked up to hear what you are playing. If not just get a stereo splitter. Its that easy. In fact its completely necessary when recording midi files into .wav or .avi since it can't just be converted afaik. good luck
!

I wish. There isn't any Radio Shack in my country.

You can take the right pug from one wire and the right input from the other, splice them and it will work. We use Audacity under Linux at my radio station and have no complaints. The best feature is the easy editing capability. Audacity, in many cases, has cut our production time in half. I highly recommend it as well.

What you want is a recorder that reads from /dev/dsp. I've had success with rawrec, and sound-recorder. Just be warned, these only work in a terminal, and they're difficult to use.
 
I suggest you do a google search for sound recorders that read from /dev/dsp.
 
Also, in audacity, you if you select "Vol" as the input source, it will record anything that's played through your sound card (although the sound quality isn't nearly as good as rawrec).