Personally I am not 100% sure on this [Media Center came with this laptop and I have the option to record from CD, Line, Mic and the stereo output mix. However, I suggest this workaround. Rip the song that you want to use, using Windows Media Player. Make sure that in the options dialogue it's set to encode in MP3 with no copy protection. Then, download and install the excellent Audacity software from
http://audacity.sourceforge.net/. Open the MP3 in Audacity, and edit away. You might want to spend a while getting to know the various controls, either by playing around with the software, or just reading the documentation at
http://audacity.sourceforge.net/help/documentation. And to get the setting back, one guess of mine would be that your copy of XP Home came with your machine and your OEM also put drivers for your soundcard/chipset which provided the extra options. You might want to download the sound driver and see if it gives you the option.