The Dork Knight himself.
I highly doubt you're doing something wrong. If I had to guess, it's the dreaded 'Pinnacle Driver Syndrome' that a few of us have seen. While the driver isn't registered properly in Windows, the Pinnacle software knows exactly where to look which is why you'll always get video/audio while using Pinnacle Studio. The only solution you have here is to uninstall the hardware/software completely and hope the next time you install it things will work out better. We still have no idea why the audio portion shows up in some systems but not in others unfortunately.
If the reinstall still doesn't get the device to show up, you'll have to use a RCA stereo to headphone adapter to get your console's audio output to the line-in on your soundcard to properly record audio.
If the reinstall still doesn't get the device to show up, you'll have to use a RCA stereo to headphone adapter to get your console's audio output to the line-in on your soundcard to properly record audio.