Tom,
No need to apologize. I'm afraid I've really dropped the ball on maintaining this project. Google Code is in the later stages of disappearing and it's way past time for me to get all the code moved over to GitHub before we lose the repo! I will do my best to get this taken care of over my Christmas break.
I do seem to remember playing with the audio capture, and I've never used the kernel module. My years-ago recollection is that the client side audio and video capture code had not yet been integrated. However, this was a long time ago and my memories are foggy. See if there is an audio capture c file in the client side code (from Git). It might not be part of the Makefile, so you might have to build it manually, I'm afraid I don't remember.
One thing I seem to remember with the audio capture is that it had a hum or buzz to it (although that might have been earlier versions and it got cleared up later). Anyways, you might get audio capture working and find out you'll still have to do a separate capture to have acceptable audio quality, so watch out for that. I'm pretty sure audio capture doesn't even work on the Windows version.
I definitely remember trying to tie in the video with a simultaneous audio capture from my laptop line in... there were some scripts I was playing around with, I'll try to dig them up. I had toyed with the idea of combining video and audio in an ogg or mkv container but did not make any progress.
Jeff