The cable you specified should be all you need,however,you should be putting the cable into the 'line' in of your soundcard,and not your mic,that input is
for just that,your mic. Line in is configured to accept the type of 'y' adapter you described,it takes two channels,merges them into one,and your soundcard breaks
that back into two,once the plug is in.
As far as software for recording,if you have Nero,it comes with an app,called wave editor,which can monitor an incoming signal,to enable you to monitor
what sound is coming in to your computer
Any other questions,I 'll check back here in a few days