Windows 7: Can only use default recording device

For the last two(?) years (since the Win 7 RC came out) I haven't been able to record sound in any gaming video in Windows 7.

I found the "fix" on these forums a long time ago (1 year?) but it still did not work for me. Until, a couple of weeks ago, I realized that I needed to uninstall/reinstall Fraps for the solution to work.

Now, I can record gaming videos (though different games often require different output levels to avoid distortion).

I'm also using a microphone for foreign-language-learning sites. But I can only do one thing at a time: either I can use my microphone OR I can record gaming videos. I have to switch the default recording device on the Recording Tab.

Does this make sense that I have to keep switching this? I used to use voice comms when gaming in the past as well as record gaming videos (all under Win XP) and I never had to do anything special.

Also, when I "activate" the mic (make it default device), Fraps' sound settings will switch to recording the input from the mic. After I switch default device back to "what u hear", I have to go back and make sure Fraps is set up correctly.