I use a program called SoundForge. It records from the sound input in your computer. You can save in a variety of formats, including MP3.
Just this week I used it to record the Martin Solveig Essential Mix off of the BBC website. Listened to the whole thing on my iPod this afternoon and it sounded good.
Not bad. I recorded at 44 mhz (cd-quality), though the stream comes at 33mhz so you're basically talking about FM radio quality. It was totally listenable on the iPod. I haven't tried it through the stereo yet.
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