Go to Control Panel, Hardware and Sound, Sound, Recording tab, right click in empty area of the box and select "Show Disabled Devices."
A "Stereo Mix" option should now pop up, select it, click on Properties and select "Use this device (enabled)" from drop down menu.
Now your set and you can adjust any other options if you like.
*You can right click on the speaker icon in your taskbar and select "Recording Devices" to skip going through the control panel menus.*
Using stereo mix is cool for sampling shit from the internet.