I use Audio Hijack Pro from Rogue Amoeba to capture sounds that are being transmitted through my Mac using applications like iTunes and Skype.
Instant Hijack is an optional plug-in for Audio Hijack Pro that allows users to initiate recordings after an audio-capable application has already been launched. Instant Hijack, however, has been known to cause conflicts with other applications. For instance, when editing music tracks using Soundtrack Pro 2, I had to remove the Instant Hijack plug-in to stop my system from crashing.
Process: Soundtrack Pro 
Path: /Applications/Soundtrack Pro.app/Contents/MacOS/Soundtrack Pro
Version: 2.0.2 (703)
Build Info: SoundtrackProProject-7030000~2
Code Type: X86 (Native)
Parent Process: launchd 
Date/Time: 2009-01-13 17:05:54.651 -0800
OS Version: Mac OS X 10.5.6 (9G55)
Report Version: 6
Exception Type: EXC_BAD_ACCESS (SIGSEGV)
Exception Codes: KERN_PROTECTION_FAILURE at 0x00000000bcb34480
Crashed Thread: 0