My DS3 is the same way. It is normal for this audio chipset.
The master Recording volume controls the record volume. Just unmute the specific source you want to record.
If you want to mix multiple sources at different volumes, make sure Stereo Mix is the only thing unmuted, and then use the playback volume controls to adjust each source individually.
I also have a Sound Blaster Live in my machine, and it has virtually the same limitations, though the controls are laid out differently.