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I think DVD Decrypter can rip a DVD and then split out just the audio track. Then you will need some other free tool (like Foobar2000) to convert it from AC3 to regular 2-channel .wav if you want to be able to burn it on a standard CD.
I know I've done this in the past, but can't remember exactly how - the original audio was on DVD in DTS format.
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How can it have better quality than the line-in? What do you think Audacity uses to capture the sound if not the same line-in?
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Oh, I think I see what you're saying. You mean capturing the audio being played back by the sound card (like when playing the DVD back on your PC), correct?