Thanks mudgel, I have just moved that question to a new thread as I wanted to sort out the drivers and settings on this thread. But it's reassuring that you use an onboard sound card at least for listening to.
Soundblend, I watched the video you linked to, but was not able to replicate what he did, as my settings are different:
http://www.youtube.com/watch?v=8-4DmJ0i7KM At 07:20 in the video he shows where to get access Ins and Outs - but mine look different to his. So I don't know how to change mine:
From the YouTube Video:


At 08:25 in the video he appears to be talking about tracks and says "that channel is set up to the output of the soundcard - makes sense",
he doesn't say HOW to do that:

As you can see, mine look nothing like his. If I knew what they were supposed to be called, I would understand better.
Some other videos I have looked at are similar in that they assume you have your settings correct to start with, and the tutorioals are more to do with how to use the program, which I would love to find out - if I could just HEAR something!
More current error/settings boxes below. I am stumped by this one. No matter what I click or select it does not seem to make a difference!
How do I rectify this problem please?
What should I have selected at the bottom here please?
thanks a lot