It seems tlsnd is broken, as of rdesktop-4.2.0:
Tested on eudemo with sndrec32, which gives an error message "Another Application is recording audio". Audacity also fails. Somewhat strange. I've also tested winmm_test, which seems to work as good as before.
Maybe consider removing tlsnd as most customers will be running newer versions of Windows and won't be able to have recording support anyway.
Commit r1791 removes hardcoded flag 0x00800000 which i couldn't find in specs. However it does match the define RDPSND_FLAG_RECORD in rdpsnd.c and i tested to add this and the recording started to work.
*** This bug has been marked as a duplicate of bug 5011 ***