virtual audio cable is direct sound only and when I tried it, it worked like caca within giga.
There MAY be a way to get it to work tho. If you are using a GSIF sound card you can probably route your soundcard out to VAC then use VAC as an input in your audio app. I have a feeling that this would work, but you may have some horrendous latency even befoer you put in effects.
I jsut think latency is going to be VERY bad when using effects that are processor hungry.