Should be although I have never tried this myself! Goto sound mixer (double click speaker next to windows clock in 98 ) select recording under >options>properties menu then select wav/direct sound as recording source.
Use your favorite sound recorder to record (I use Audacity it is free!)
You may have to convert to mp3/wma or whatever afterwards.
Bear in mind 'listen again' is pretty poor in quality (from what I have heard) I know I couldn't put up with the poor sound it offers through headphones, unless it was more content than music!
What about hooking HIFI vcr to a normal radio, record in long play up to 8 hours (very high quality if decent video!) then connect to computer line in and record that! I do this with 'hot off the press tunes' and make pretty good ringtones out of them, although it is a bit of messing with wires etc!