You said Vista, so I don't know how you'd do it, but try turning your Stereo Mix volume all the way DOWN.
Last time I checked, that'd just turn off all sound...
You have Stereo Mix confused with standard volume.
Stereo Mix is a recording option that allows people to loop their output (what they HEAR, from speakers/headphones/etc) to their input (the thing that usually picks up the mic). The volume for Stereo Mix controls how loudly the INPUT takes in the OUTPUT.
I'll put it another way for added clarity. Let's say you have Windows Media Player (or iTunes, or whatever you use, hereafter called "your music") playing, and your system volume is full blast. Well, you want to turn your music way down for a minute, but you want everything else to be full blast. Your music has a volume control right on there.
Same sort of thing. Stereo Mix has volume for how loud it plays to other people (i.e. not you)