I am not sure what you mean by "record from Windows Media Player". Have you tried to reduce the record volume in the Record Window in WavePad? Please also refer to this to see if you can find an answer.
http://nch.invisionzone.com/index.php?showtopic=24
With the free version, you can use all the advanced features of the Master Edition for 14 days. After 14 days, these features will be disabled; however, you still can use all other features of WavePad.