"Wave In" control serves for selecting the source of the sound you are going to transcribe. "Wave In" control is located at the top of main window. By default "Wave Mapper" is selected, this will fit for most cases. At the right of "Wave In" control there is "Start/Stop Wave In" button. It turns sound sensing on/off . "Windows Mixer" button to the right of "Start/Stop Wave In" calls standard Windows "Volume Control" dialog.
"MIDI Out" control selects the device for producing MIDI sound ("MIDI Mapper" by default). Change it if you'd like to use custom MIDI device, such as external MIDI synthesizer.