Xsplit system sound not recording

Well this was an odd one. Today I tried to get Xsplit to record system sounds aka the sounds a game plays over the speakers etc. but it failed to do so. Mic input worked fine when tested so I had a deeper look into the issue.

It turns out that the latest patch for Xsplit did something odd to its response to being muted in the system sound panel. Rather than muting the app (xsplit) like it should, it muted the system sound input to Xsplit instead. So as a result you have to keep the app un-muted to make it work properly.