If Line In does not appear in the properties of Speakers that's OK. Re-enable Speakers, in the properties for speakers check that there are no odd controls on the "custom" tab (if there is one), make sure the levels are OK on the levels tab, and select the box to "disable all enhancements" on the Enhancements tab. Also disable enhancements on the properties for Line In and make sure the levels are OK on its levels tab.
Make sure the 3.5mm plug on your stereo splitters looks like the picture in this thread:
http://www.hometheatershack.com/foru...on-basics.html
There need to be 3 connections on the plug, there are lots of "stereo" splitters that just have a mono 3.5mm plug that is linked to 2 RCA sockets, they are no good for this purpose.