Ok, you should already have the Nullsoft CD\Linein plugin (in_CDDA.dll). If not, get the full version of Winamp. Also, try getting another version of Winamp. Yours might have a glitch (what version do you have?). But if you want to use line in WITHOUT the dsp shoutcast plug-in doing it, hit ctrl+l and try linerec:// . That will open your line-in port. Winamp already has support for line in recording.
Developer; On-Demand Audio
Yeah, that's pretty much it. :-\