man.i also had this problem ..
the solution is simple ..your volume in audiocity may be full..but by default ..windows mutes the microphone and line in jack in the volume controls .
the speaker in the taskbar ....double click on it ..go to options >properties ..check the microphone and line in jacks..den click ok..you wil see too bars microphone and line-in ..uncheck mute in both boxes and increase he microphone volume and line in volume to full..and enjoy recording ...
Life aint about the number of breaths you take but the moments that take your breath away !!!!
IF u cant find the needle ..burn the haystack !.