For audio using a microphone as the source, the signal chain would be:
Microphone to Preamp (or mixer with preamp) to Line In on sound card.
The sound card will digitize the signal through its A to D converters and the digitized signal will be captured (recorded) by your recording software.
You tell the recording program where the signal is coming from (e.g., Line In Left, Line In Right, Line In Stereo) through controls within the program. Also you will need to set your windows sound mixer (or sound card mixer if applicable) to use Line In for recording.
If you are recording from a source that already puts out a line level signal - e.g., keyboards or virtual drum kits - you can go directly into the sound card without a preamp.
Also, if your sound card has a "mic in" connection you can plug the mic directly into that connection and eliminate the preamp in the above chain. In this situation you will be using the preamp that is built into your sound card. However, in most cases that is a very cheap and crappy preamp and the recorded music will reflect that.
