I am currently using a Windows 7 laptop, and I would like to record the system audio and microphone input simultaneously. So far the only program that has successfully worked for me is Camtasia Sudio 7.1 The problem with using Camtasia Studio is that it records both screen and audio. I don't need to record the screen just system audio and microphone audio. Does anyone know of a program that can do this. I have tried to us Audacity but have been unsuccessful.

Look into piping audio.
Seems Vista/Win7 introduced and API just to do that.

Audacity does support recording any sounds that are played from anything.
http://audacity.sourceforge.net/help/faq?s=recording&i=streaming


TotalRecorder will do it for sure.
http://www.highcriteria.com/

FWIW Camtasia 7.1 is able to record the system audio and microphone input from a wireless USB headset while actively outputting audio to the wireless headset. Apparently the smallest screen capture box I can specify is a 20 x 20 box, and then I can save the recording. After I have saved the recording I can export the audio to a file, e.g. audio.mp3