Share your experience!
I have done some research and discovered that SONY has intentionally disabled the 'Record what you head' source on the Realtek soundcard (in fact all VAIO soundcards!).
Does anyone know why this has been done or if there is any way to bypass it?
Does anyone know why this has been done ....

absolutely ridiculous. I'm using it for music sequencing and recording and need to bounce tracks using it. Any workarounds would be much appreciated...
Yeah it's very annoying, this is why I'd rather do my music work on the Mac.
Stereo Mix was mainly stopped because people were using it to copy DRM'ed music.
You can just connect the headphone out to the line in with a jack and then record whats coming out. Simple 
You can just connect the headphone out to the line in with a jack and then record whats coming out. Simple
Shame.
Whole worlds gone potty with all the music copying and DRM 
True that.
Also you'd loose some quality due to converting it to analog.