DH48 wrote:I think i have solved the problem. At least i got it working now with the kraken 7.1.
The problem is with the kraken 7.1 launcher that block out all other audio when recording the fix is. Press start and in find type "msconfig" and press enter. Now got to startup tab and find kraken 7.1... then disable it and press apply. It will ask for a restart.
Also if you are using CCleaner you can just open that up and click tools.... startup and find kraken launcher...untick it and then restart the computer.
Now for action. In the settings have the system audio set to default and mic to the kraken.
Razer team might fix it in the future but in the mean time this is the fix.....at least for me.
You should now be able to record sound and the audio of games you want

This post was very accurate. It worked perfectly for me as well. Thank you.
To clarify this, let me explain this in briefer detail: Razer Kraken 7.1's control panel doesn't allow you to record sounds from games that require a base program to run such as Steam. Where there's an overlay, there's an issue. So to solve this do exactly these steps:
1: Click start and type "msconfig" without the quotes in the searchbox. Msconfig.exe should pop up, that's your beast.
2: Find Razer Kraken 7.1 (there is no launcher or control panel) and disable it. Hit apply.
3: It will ask if you want to restart, click not yet, this will be your last step.
4: Go to Mirillis Action and click on the film icon. Set your settings (which should be saved), and disable multi-channel audio recording.
5: Go to the settings tab at the top and then the sound tab in the frame box. Set the microphone to the Razer Kraken Microphone. Set the system sounds to "System default" and that should do it. You can adjust the other settings as you want, such as AAC, etc.
6: Restart your machine, boot up CSGO or other steam games and do a couple quick test clips.
As it worked for me and this kind sir above me, I believe it will work for you. Enjoy people.