default / auto bouncing ?

I am assuming you are using XP, if so this is almost definitely your problem. Your recording source is the Wave Mix Out not your Mike or Line-In. This means music creator is recording everything that is coming out of your speakers NOT what is going into you Mike or Line-In ports.

You need to acquaint yourself with the Windows Audio Panel.

There are 2 ways to access it the easiest to to double click on the small speaker in your task bar. If there is no small speaker go into control panel and click on "Sound and Audio Devices" (make sure the control panel is in the classic view), then in the "Device Volume" section of the "Volume" tab click the "Advanced..." button.

You will now see a panel with a number of sliders, click on "Options" in the top left, then click "properties", then a new window will open up and select the "Recording" option and check that all the boxes are ticked in the "Show the following volume controls:" box then click "OK"

The window you now see shows you the recording source and volume levels make sure that Line-In or Mike is selected and the volume set correctly.

This will probably solve the problem. You should get a complete grasp of this control panel.