Input recording ALL output (how do I turn this off)

Here's a sample of the situation.

-I record or insert sound on to track one
-I disarm track one, and arm track two to record input from the soundcard mic input.
-When I start recording, everything sounds and runs fine.
-When I stop recording, everything from track one, as well as what I just played through the input is recorded to track two.

I thought this a little strange, so I tested it's limits.

Instead of playing something through the mic input, I opened windows media player and opened an mp3.
It recorded it. :(

Seems like EVERYTHING that comes out of the speakers is being recorded on to my armed tracks no matter where it comes from or goes to...and I can't figure out how to turn this off. There has to be some way to control this feature, and I'm thinking it might have nothing to do with Cakewalk since it happens in Cubase, Acid Pro, GoldWave, and even Windows Recorder.

Please help.

You may need to unselect the stereo mix (by selecting something else that you aren't using). On my system "Stereo Mix" is equivalent to "Record what you hear". Setting the slider down all the way will not do it. You have to unselect it.

Larry