What's the reason behind "Stereo Mix" becoming a missing option?

The following thread has many explanations and workarounds :
Missing sound recording option "Stereo Mix" / "Record What you hear" / "Waveout mix".

One of them is :

Since Microsoft intentionally removes the Stereo Mix / Waveout Mix option from its drivers, you need to try to download the latest version of the sound card driver and install it. If you have an onboard sound card, go to the support section of the manufacturer of your PC (such as Dell/HP/Toshiba/Sony/Fujitsu/Lenovo/Acer) and download an audio driver for your model of the PC that works with your Windows version. Please note that the manufacturer doesn't support Windows 7, you can try to use Windows Vista driver, althouth there is no guarantee that it will work and will not damage your hardware.

Another remark is :

The problem is that you won't be able to enable the "Wave Out mix" ("Stereo Mix", "Record What you hear") on many computers with built-in sound cards. But you can use software that doesn't need the "Wave Out mix" ("Stereo Mix", "Record What you hear") recording option to record audio from your sound card:

Direct sound recording software allowing to record audio without Stereo Mix/Wave-Out Mix/What U Hear

• Audacity (Open-source) - sound editing and recording program (Windows 7, Vista or XP) (see instructions)
• Freecorder (Freeware) - sound recording program (Windows 7, Vista or XP),
• Replay Music - shareware sound recording program that can split and tag songs automatically (Windows 7, Vista, XP or 2000),
• Replay AV - shareware stream recorder that is good for scheduling online audio recordings (Windows 7, Vista, XP, XP, Server 2003; x32 or x64),
• Replay Media Catcher - shareware stream recorder that can record audio from your sound card as well (Windows 7, Vista, XP, 2000, Server 2003),
• Ask & Record Toolbar (Freeware) - sound recording program (Windows 7, Vista or XP)
• All Sound Recorder - shareware sound recording program with a scheduler (Windows Vista or 7)

Screencasting software allowing to record video with sound even if you don't have Stereo Mix/Wave-Out Mix/What U Hear

• WM Capture - shareware screen recorder that allows to record both audio and video (Windows 7, Vista or XP),
• Replay Video Capture - shareware screen recorder that allows to record both audio and video (Windows 7, Vista or XP),

Virtual Sound Card software

• Virtual Audio Cable - shareware software that creates a virtual audio device (Windows 7, Vista, XP, 2003; x32 or x64)
• Virtual Audio Streaming - shareware software that creates a virtual sound card (Windows 7, Vista; x32 or x64)

As you can see, the programs work not only in Windows XP, but also in Windows Vista and Windows 7. In fact these programs can be the only way to record audio from your sound card.

Freecorder4, Replay Music, Replay AV, Replay Video Capture, Replay Media Catcher, Ask&Recorder Toolbar, WM Capture use a universal audio driver allowing you to record sound even on those computers that do NOT have a sound card!

Please note that the Stereo Mix (virtual) device only works if the audio goes to that specific audio card. If your audio is coming out of the HDMI connector, or a USB device, then Stereo Mix won't work. Let me explain my setup:

In the picture above, I have audio coming out of the HDMI connector and playing on the TV. This goes directly to the NVIDIA video card, and thus does not pass through the Realtek audio card. Since Stereo Mix is provided by the audio card, it won't work.

Solution? Plug in some analog speakers or earphones, or enable the Realtek digital output and select it as the default playing device. When this is done, then the audio can pass through the audio card, and the driver can finally provide Stereo Mix.

I can't give you a reason, but quite probably a solution. I've been having this issue since the Windows Vista. Stereo Mix is still alive and kicking, you just have to give it a good push through the door.

First off, you'll probably need the full driver package (not the drivers Windows installs when it detects the chip.)

From there, it's usually pretty straightforward - Stereo Mix, you see, is not actually missing, but it's deactivated and therefore hidden in the Windows' audio configuration. To reactivate it:

1. Show hidden devices (sorry for the German screenshot, but the places should be identical)

2. Stereo Mix should reappear - activate it.

This is at least how it works on the Realtek HD chipsets - but I assume it's the same with other major onboard sound chipsets.