iBook - Problem: monitoring all sound from mic

Hey, I have an old G3 iBook (700 MHz, 256 ram) which has been playing all sound that it picks up with the mic through the speakers. This only started happening after the second or third use of the freeware program Audacity when I turned on the option of monitoring sound while recording.

I've deleted audacity, but the problem persists. Does anyone know of a way to get rid of this without formatting the hard drive? (while I'm thinking about it, if I had to format the hard drive, to save the programs, could I just copy the application folder to an external hard drive and put it back on or would that not work?)

Thanks