Make sure you upgrade to the latest Pamela build before trying the suggestions.

This error message is caused by the Windows core sound system. The cause can be many different situations where Pamela is unable to start the Windows system process that is required for the recording.

If you absolutely require MP3 audio, the solution is to install the ACM LAME codec as there is an incompatibility issue with the default MPEG-3 codec present on your system.

Details on how to install the LAME codec can be found here.

Alternatively you might want to try to disable MP3 and see if WAV does work before trying above. To disable MP3 open the options in Pamela and click "Sound". There you will find the option (check it) to disable MP3. Close the options and try a recording.