turns out to not be too trivial…
To turn it on, right click on the “speaker” in the system try (or run sndvol32), “Open Volume Properties” (or run sndvol32.exe — same effect).
Now select recording devices by going to options [menu] => properties -> radio button select “recording”, make sure wave out is checked, hit ok.
Now make sure the check box under “wave out” is selected. Now selecting your sound card’s “input” should actually be it’s output. Your default recording device will be “what you hear”
Select your “audio card’s name” in VLC to record.
A driver I made for it: open-source-audio-sniffergrabber-for-windows-7vista just use that (easy!) The README describes how to manually do the above in Vista+ too but I’d just use the device.