You can use any sound card: integrated, add-on card or external device (USB or FireWire).
Sound Card should have DirectX-compatible audio drivers.
Recording capabilities no longer depends from the "Stereo Mix" feature.
Yes, this is possible if your record from the "Speakers" in loopback mode.
i-Sound get audio stream "as-is" without any modifictions. Recording level in this mode depends only from playback volume level.