Do you have quicktime pro? I think that might be your best best for recording audio. How much does that cost these days? I didn't upgrade when I moved iBook *sigh* Now Audio Hijack might also be able to help you - that makes .aiff files that import into iTunes and then iTunes converts that to mp3. But you have to quit the program every 10 minutes if you don't want to pay for the registered version... it launches hiss to corrupt sound after 10 mins which is fine if you're grabbing one song but not much else.

A quick google and I'd say you actually need Audio X (http://www.realmacsoftware.com/)

Let me know how it goes.