How do I record sound playing from my computer with headphones in the slot?

I need to record some audio off a video i have on my computer, and i tried without headphones in and i got all the background noise from around my house, so i want to do it with headphones in, only problem is when i record it, it turns out really low sound, even if i have the volume up the highest when im recording, i need it really good quality! can anyone help me :)?
im using the program ‘audacity’ to record from the comp.

Wondershare Streaming Audio Recorder uses virtual sound card to record any sound played through your sound card, record music from any online music sites and radio stations like MySpace, Napster, Rhapsody, XM radio, AOL radio, etc. After recording, you can split audio files; edit ID3 tags like title, artist, and genre. Or, you can add recorded file to iTunes, Windows Media Player, or Winamp.