depends
you need to make sure all the options match up
in the os sound control panel, in the interface driver, and in your software.
this is the most asked question on the audacity forum.
i suspect your answer will like the one they get.
now if you are using win7 or vista, or using usb there may be other issues and you definitely need to set your software options as the defaults usually are for something else.
then when that is done
if you want to record push the start button
my tape deck does taht
audacity does that
that being said, some software has jargon for a function that they require before you can push the start button.
and you may need a different option to hear while you record.
some cards call this stereo mix, others have their own names for it.
if you have a large multitrack capability you would need to enable the tracks you want to record on and omit the others.
this selection process, the best i can tell, uses the term "arm" in order to pick the active tracks for recording.
your software may require this extra step.
it is all part of a conspiracy to use non-intuitive terms to keep newbies confused imho