First, make sure you've selected the correct recording source. If possible, it's best to choose a specific source, instead of something general like "stereo mix," "what you hear" or "digital wave."
For example, if your recording source is a microphone, choose "microphone."
If your recording from your computer's Line In input, choose that.
To choose your recording source in Mixcraft, click on the small down arrow that appears to the right of the Arm button on the track you want to use for recording. First, choose the sound device you want to use (you may only have one choice), and you"ll see a sub menu with a Stereo Source option.
If you already have a specific source selected, your microphone could be picking up the sound from your speakers. Try turning off your speakers and using headphones to monitor the audio.