OK: I just recorded on my Dell Latitude CPxJ...same results. Pops and messed up looking levels.
I recorded on my wife's Latitude (much newer, XP) and had jacked looking levels, but no pops.
My specs: 20G, 256 RAM, P3 (650), 1 USB, Win2000, Service Pack 3.
Looks like we are gonna reinstall the OS and see what happens.