Audacity is a cross-platform digital audio editor. My experience is limited to using it on Linux, but presumably much of what follows is relevant to other platforms as well.
In Linux, Audacity is included in many distributions’ package managers.
The following assumes you have already confirmed that your speakers and microphone work, audio playback and recording works, and that your audio mixer levels are set appropriately.
Open Audacity and see if audio playback and recording work out of the box. To test playback, open a known good audio file (File – Open) and press the Play button (the green arrow). You should hear playback. To test recording, close the file you just opened. Press the Record button (the red circle) and begin speaking into the microphone. You should see a waveform as you speak. Press the Stop button (yellow square) to stop recording, and play your file back as above.
If playback and/or recording do not work out of the box, open Audacity’s preferences (Edit – Preferences) and change as needed. The only item I have needed to change is to explicitly select ALSA (Devices – Interface – Host).
While in Audacity’s preferences, change anything else as desired. The only thing I change is to set the temporary directory to ~/tmp/audacity/ (Directories – Temporary files directory – Location).
On Linux, Audacity’s configuration file is ~/.audacity-data/audacity.cfg. This is the only file I back up; I exclude the rest of ~/.audacity-data/. On a default installation you should also exclude Audacity’s default temporary directory ~/audacityX.X-USERNAME/, where X.X is Audacity’s version number and USERNAME is your user account name. I can skip this because I configure Audacity to use my user account’s temporary directory, which is already excluded from my backup set.
These notes are based on Audacity 1.3.12-beta on Linux and were last updated 23 February 2012.