If you're getting the "Recording Failure" popup:
Try toggling on Audio Capture again.
Check to see if there are other apps running that interact with the audio stream and disable them, such as Rogue Amoeba / SoundSource.
If that doesn't fix the issue, restart Rewind. If needed, open Activity Monitor, double click on Rewind, and you'll see the option to "Quit".
Restart your Mac and reboot everything.
If you're still experiencing issues, please send over logs by clicking on the Rewind icon in the menu bar (upper right hand corner of your Mac) > Share Feedback > Choose "Bug" for Feedback Type. Make sure "Attach logs to help with debugging" is checkmarked. If you aren't able to send logs through the app, you can also send logs manually.
For context, the purpose of the Recording Failure popup is to notify users to reset the Audio Capture manually (toggle off and back on) when they are changing audio devices or disconnecting from an external monitor. Best practice would be to enable audio capture after unplugging from your external monitor so that the displays aren't flickering while we're trying to set up audio.