Nice Recorder uses Windows Volume Control.
Double-click on the speaker icon in your taskbar tray at the lower right hand corner of the screen.
If you do not have a speaker icon in your taskbar tray, check Start button->Settings->Control Panel->Multimedia->Audio->Show volume control on the taskbar.

Double-clicking the taskbar speaker icon causes the Play Control window to appear.

You can control which sound card speaker-input controls appear in the Play Control window. In Play Control menu Options->Properties, check the controls you wish to appear, and click OK. Hint: We keep nearly every control checked.

For each speaker-input shown, you will see a Volume slider and Mute checkbox, and perhaps other controls for balance, etc. The Volume slider controls loudness for that particular speaker input, and Mute can turn it off completely.

Control Recording
Always remember that the Play Control window only deals with speaker output, and does not control recording! It is a natural mistake to go into Play Control and uncheck the Microphone Mute control and turn up the Microphone Volume, and then wonder why Nice Recorder is not recording from the Microphone. It doesn't work that way!
Bring up the Play Control window as above. In menu Options->Properties, check Recording and check all the controls, and click OK.

The Play Control window is replaced by Recording Control.

For each recording-input, you will notice a Select checkbox and Volume slider. If you want to record from Microphone, check the Microphone Select checkbox. If you want to record from Line-In, check the Line-In Select checkbox. If the recording volume is too low, turn up the appropriate Volume slider.
Sometimes you may wish to record streaming audio. Many modern sound cards present a recording input called Wave (Stereo mixer) that may work. Several sound cards also offer a recording input called "What U Hear" or a similar name,that records anything that can be heard over the computer speakers.

Notes:
You may be able to convert your sound card to a DirectSound-compatible full-duplex sound card by installing the latest version of the sound driver for your sound card. Contact the manufacturer of your sound card to inquire about how to obtain and install the latest version of the sound driver for your sound card.