Audacity can be used to record (and edit) just about any audio that
flows through your computer, from just about any source.
http://audacity.sourceforge.net/help/faq?s=recording&i=streaming
I'm currently using Audacity 1.3.11 (Beta) to convert my vinyl records
to mp3's.
Audacity 1.2.6 is the stable version.
http://audacity.sourceforge.net/
The other night I fixed a skip by replacing the "damaged" portion of
the track with a copy/paste of the same few notes from another section
of the song.
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