The availability of "Stereo Mix" or "What you Hear" is totally dependent on your hardware supporting this and the manufacturer providing Drivers to allow this to be used in win7
to check this ....
right click on the speaker icon in the tray
select the recording devices
right click on the device area blank space and check the display disabled and disconnected items
if your hardware/driver supports the function you should now see an appropriate icon.
select this icon and enable it using the drop down box at bottom right of the dialogue
