Hi,
Update, 25Jan13: We have now confirmed that this problem exists on both Windows 7 and Vista. Furthermore, using ASIO4ALL as described in the post fixes the problem so that is our advice for users sufferring with this issue. We apologise for any inconvenience for what we believe is an issue with Windows itself. We will take this up with Microsoft (wish us luck!).
I'm running some tests here. So far I can't reproduce the problem but I don't have all the latest updates installed so the next step is to install these and try again. From what evidence I have, your desktop will probably work OK. I think the problem only occurs on specific machines.
As for ASIO4ALL, you can download it from here:
http://download.cnet.com/ASIO4ALL/3000-2120_4-75724497.htmlAfter you have installed it, open VinylStudio's Check Level dialog and select ASIO as the input source. Then open the ASIO Control Panel (a button to do that will appear) and select USB Audio Codec as the active device, like so:

You might need to click 'Retry' in the Check Level dialog (or possibly shut down VinylStudio, close the ASIO control panel and then restart VinylStudio) before this device appears correctly. Once you've got it set up right it should look like this:

Then record as normal.
There's yet another thing we can try, but it involves an additional cable. Let's see if ASIO4ALL does the trick first.