It is dead easy. The basics are in the MilkDrop readme file. Tut-tut for not reading that first.
7. Using Line-In
If you want to use your sound card's Line-In or CD Audio inputs for
sound data (instead of mp3 files), you can do this. Do the following:
1. CONNECT WIRES
Connect your audio source (a stereo, a live feed, whatever) into
the line-in (or microphone) 1/8" jack on your sound card. You
might want to test & verify that your cable is good before doing
2. SELECT SOUND INPUT CHANNEL & ADJUST VOLUME
In Windows, double-click the speaker icon in your systray (where
the clock is). Then, on the menu, go to Options -> Properties
and select the "Recording" option. Then make sure the Line In
(or Microphone) input channel (whichever is appropriate for
your case) is SELECTED (with a check mark) and that the volume
is close to, or at, the maximum. Hit OK.
3. TELL WINAMP TO USE LINE-IN
Open Winamp, and hit CTRL+L (the "Open Location" hotkey). Now
type in "linein://" as the location you want to open. (Leave out
the quotes and make sure you use FORWARD slashes.) Hit PLAY
('x' key for the lazy), and the little built-in oscilloscope (or
spectrum analyzer) in Winamp should start showing your signal.
4. RUN MILKDROP
Run MilkDrop as usual. If the waves are too small or large,
either adjust the volume from Windows' Volume Control, or adjust
the sound level at the source.
If you are doing shows using live audio, and if you have a multiple monitor
setup, you might also want to use the "VJ mode" feature, which lets you
control MilkDrop via a separate monitor.
But in the real world I would goto Jaspers
and download the low_latency plug-in therefore reducing the delay.
It should work a treat for live set. I do them often and have no problems.
(edit Krash your too eager....