Without knowing what your settings are a specific answer can't be given..
To record using a microphone:
At the top left of the program is a drop down list.
Click the arrow and select "microphone" from the list.
Click the red record button and start recording.
Adjust the recording level with the control to the left of the input selection list.
I run XP so I can't check this but if the list is grayed out follow this:
More specific to recording sound direct from the drive but like I said - I can't check it.
Vista: Click Start> Control Panel. Select Manage Audio Devices in the Sound Section.
Click the Recording Tab and if the Stereo Mix Option is missing right-click on an empty part of the window and left-click on Show Disabled Devices. Right-click on the icon and select Enable. This will enable recording of sound coming through your speakers.
Multi-track recording setup:
Version 1.2 via File menu, version 1.3 via Edit menu.
Preferences / Audio I/O tab and check:
"play other tracks while recording new one".
Import the first track then monitor it while recording subsequent track/s.
It's best to use headphones while doing this to prevent feedback.
Basic tutorials:
http://audacity.sourceforge.net/manual-1.2/tutorials.html
https://wiki.brown.edu/confluence/display/CISDOC/Audacity+Tutorial