The ability to record system audio is now included in the new Windows ilos recorder.
System audio is the sound that comes out of your speakers. If you are recording an application and want to record all of the audio alerts, or if you are recording a short webinar or Skype call, you will want to record system audio.
To do this, go to your ilos recorder control bar and select the microphone icon >> More Options >> "Primary Sound Output Device."
Note: System Audio is not currently available for the Mac Recorder.