1) Open Terminal and install PulseAudio Volume Control by issuing the following command:
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sudo apt-get install pavucontrol
2) Launch the PulseAudio Volume Control program by typing "pavucontrol" (without quotes) in Terminal and hitting ENTER.
3) In PulseAudio Volume Control, click on the "Input Devices" tab
4) Make sure to mute all unwanted sources of sound input
5) Click on the "Show" radio button and change the setting from "All Except Monitors" to "Monitors"
6) Play the music file in Banshee, and make sure one of the Monitors in Volume Control (in my case, it was called "Monitor of Built-in Audio Analog Stereo") is picking up the sound
7) For the Monitor that is picking up your sound, click on the green check button to "Set as fallback"
8 ) Launch Audacity and record
That allowed me to record music coming out of my computer speakers in Audacity without it sounding tinny and low (like a cheap mic).