Okay, I've been playing with it and I do not think it is a problem with my package. It took me a couple of minutes to get the settings right on STD but it worked perfectly afterwards, recording was clean, no pops or crackles. I had to set it to use the correct input and output settings. Also, I set it to use 24-bit audio instead of 32 and do 48000Hz instead of whatever was default as it didn't work. Once this was done, I found that I could indeed record but my microphone was so weak; it was hard to get any kind of signal. To fix this, I enabled "Mic Boost" in the little sound icon in the taskbar under "Advanced". With this option checked, it boosted the microphone signal so that I could finally do some recording. It works great too! Oh, also I bumped up "Audio to Buffer" to 700ms instead of 100ms, this may or may not be a good thing on your computer.
Here's a screenshot of my preferences:
If after fiddling with these options and you still cannot get Audacity to work, try a stock Slackware Audacity package. You can download it here: http://repository.slacky.eu/slackware-12.0/multimedia/audacity/1.3.4/audacity-1.3.4-i486-1sl.tgz
If after trying that package and everything miraculously works, I'll reconfigure and recompile Audacity.
EDIT: If you are using SOHO alpha, you will have to enable Mic Boost using alsamixer from the terminal.