In gnome-volume-control, it may be necessary to choose “Off”, close it, open it again, choose the desired option and close it again.

Some of the other options may work sometimes, but they may record sometimes the system sound and sometimes the mic sound. And other options may record audio but could not permit to listen to the recorded sound. So it’s better not to use those options.

NB: system sound is the sound of what one can hear from the speaker. It can be a .ogg or .mp3, … song played by Totem, or a Flash music video of a web site, …

But gtk-recordMyDesktop has 2 problems:
a) When you click on stop it takes a lot of time to encode the video (in xvidcap you have it in the moment you stop the recording).
b) It uses a lot of space in a folder called more or less /tmp/rMD-session-xxxx. Sometimes is deleted after the encoding but sometimes not (keeps on growing) and you have to delete it before your Linux root partition (/) gets full.

To be able to record the sound with xvidcap (from the mic or of the system) you just need to follow a few steps to install it properly:
http://ubuntuforums.org/showthread.php?t=1714139