Cannot play through computer to stereo

Here is what I want to be able to do:

I have my guitar hooked up to the Line-In of my Dell Inspiron E1705. It
uses a 1/4 inch cord, which i plug into an 1/8 inch adapter to acheive this.
Next, I have a stero plugged into the headphone jack of my computer using
another 1/8 inch plug. I want to hear both music from my computer, and my
guitar at the same time.

Problems:

First, when I plug in my guitar and play, no sound comes through (even if I
unplug the stereo and use the built in speakers. But, I know the signal is
getting through because I am able to record using a recording studio program.

Second, unless I have the 1/4 inch cord plugged extremely loosely into the
1/8 adapter (i.e. not all the way in), the computer only picks up the left
channel of the signal.


My audio playback/recording "device" is Sigma Tel Audio, which I find to be
extremely basic and lacks any real options. Creative Sound Blaster Audigy
ADVANCED MB is also installed.

What is the problem and how can I fix it?