I went through the exact, same problem last night. Unfortunately, I'm not sure how I solved the problem. (The mind is going to hell.)

If I recall, I went to the sound card and reset everything to Default. Then in Acid Pro 4.0 I clicked on tools/preferences and reset to Default there too. At this point I went back to the sound card and selected Line In for recording, then went back to Acid Pro, clicked on tools/preferences/audio and selected ESS Alegro for all playback devices. Now I pressed record and for recording devices I selected Soundblaster Audiology, which is my sound card. Everything worked fine after that.

Gary

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Travlin' Easy