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 some application already used sound card in Exclusive mode.
Possible solutions:
Went into the soundcard controls and turn off 'Encoder'
Go to Control Panel -> Hardware and Sound - > Sound.
Right-click on Speakers, select the "Advanced" tab, clear the "Allow applications to take exclusive control of this device" checkbox
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.
In most cases it's a problem with secondary display. Recorder remember last window position and will appear outside desktop if secondary display inactive.