I'm trying to stream with my Dazzle, but it doesn't pick up audio so I have to use a separate microphone rather than use the Red and White jacks. What am I doing wrong?

I don't think you are doing anything wrong. If that's justin.tv or something similar, the the flash plug-in just sees the dazzle as a camera source. You have to use your sound card to connect audio.

My video recording program doesn't recognize it either. It's pretty lame.

Does the Pinnacle program that came with it recognize the audio source? Have you check device manager if the audio driver was installed properly? Some Dazzle has separate entry for audio and video.

 

I guess I didn't try the Pinnacle program yet, or the device manager, but since Justin.tv and my other program recognizes it as an option, I assume that it's installed correctly, just doesn't work.

This whole thread is a good reading.

Try it out and let us know how it turns out.