Have you set up MMC audio settings --AND-- Windows input recording settings?
Some of it is covered here:
and the ATI MMC settings are in the INITIALIZATION WIZARD. Let me know if you need step by step images for that.
I have the 3-pin white-colored AUX cable into the AUX channel on my SoundBlaster and Turtle Beach cards, and then it comes from the ATI AIW card AUX output (which is fed by the purple break-out box RCA audio inputs).