Originally Posted by stjohn
In cubase you just activate the input you want to record from , this is done in vst-inputs window I believe.Then you create an audio track and change the tracks input in your inspector window to your desired input source. After that arm the track and hit the record button. Most sequencers (or DAWs) work like this, they all just have a slightly different way of internal routing.
In this way you can put external fx on the stuff coming out of your computer and then record it back into the machine, but you can also record your hardware synths, microphones, guitars,.... into your sequencer.