Morning!
First, I'm glad you got the wave forms/Beat wiz working in S3. The beat wiz works well in songs with a constant tempo, but unfortunately most of the songs I use DON'T have a constant tempo... so I use the wave form a lot (and the tap wiz).
Next, I'm not an Audacity wiz by ANY s-t-r-e-c-h of the the imagination. Without knowing more about your system and your setup I'd have a hard time hazarding a guess. I did find something in Audacity's Wiki about sound dropping out when trying to record and using Win 7 listed here:
You are not allowed to view links.
Register or
LoginI'd suggest looking through their wiki and seeing if you can find anything pertaining to your setup and your issue. Failing that, you can pose the question on their forum You are not allowed to view links.
Register or
Login. Doing a search in their forum You are not allowed to view links.
Register or
Login it appears that there are others who have had issues in the past. I've been fortunate enough to have things work on my Win 7 and Vista machines, so I haven't had to do much digging yet. Sorry.
Hope you get your issue resolved soon, and drop me a PM when you find out what it is if you would be so kind so that I can add it to my "Audacity and S3" knowledge base.
Jamie