Hey, It's Me Again,
You might try setting up similar to me and seeing if it works for you. (Works for me...) I had to fiddle with the Capture settings in KMix until I got it right, and your sound system is different, so maybe that's a problem. I found that, for my hardware, OSS seems to give better results than ALSA. Your mileage may, of course, vary.
You might also, since your objective was to record audio from Youtube, look at YouTube to MP3 1.2.3 (it's a Firefox extension). It does a direct conversion of the audio to MP3, purportedly at high quality.