I can also recommend Audacity (go for the 1.3.12-Beta) as iv`e done quit a lot of old Hacienda/house tapes with it (the Effect/Noise removal helps

). Give us a shout if you have any issues.
You will also need to download and install Lame mp3 encoder binaries if you wish to save the output as mp3 format.
If you wish to listen to what your recording you may need to right click on the speaker, select "Recording devices"->Double click your Line In -> Select "Listen" and tick the box "Listen to this device".
Also when recording via Audacity you may need to tweak the ouput volume of the tape player. You wan`t the blue waves to be just reaching the outer edges (like in the pic).
When saving you need to hit Export and from the drop down choose your file type (e.g. mp3) where you can also choose your bitrate by clicking Options, next add title, etc if wanted.