Hi Scott
Unless your soundcard has a mixer built in, then you will need to switch between Mic and Line inputs.
The alternatives are to use and external mixer and connect its line out to the line in of your soundcard, and set Skype to use the Line Input. (You will need to set the sound levels manually in Skype, as the auto function will not work correctly with an external mixer)
Also remember that most broadband has a much slower upload speed then download speed, which means you will most likely run out of bandwidth when trying to stream music directly over your connection.
Hope this helps

Bill